ISLAMABAD:
The Cabinet Committee on State-Owned Enterprises (CCoSOE) on Thursday refused to immediately grant accounting relief requested by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), ordering the Petroleum Division to revise its proposal after the two utilities warned that the lack of exemptions from international accounting standards could leave them vulnerable to insolvency.
The committee, chaired by Finance Minister Muhammad Aurangzeb, asked the Petroleum Division to hold further consultations with the ministries of Finance, Law and Justice before resubmitting the proposal.
The request sought to exempt certain energy sector entities from the application of International Financial Reporting Standards (IFRS) 4 and IFRS 9, citing the financial impact of increasing circular debt.
According to a statement issued by the Ministry of Finance, the meeting was attended by federal ministers, secretaries and senior officials, who discussed a range of governance and policy issues related to state-owned enterprises.
The commission noted that SSGC and SNGPL had argued that failure to obtain the requested exemptions could put the companies at risk of being declared insolvent due to the accounting treatment of circular debt.
Rather than approving the request, the committee directed the Petroleum Division to review the proposal in consultation with the Ministry of Finance and the Ministry of Law and Justice before resubmitting it for consideration.
The statement said the petroleum division has requested exemptions from IFRS 4 and IFRS 9 for certain public entities operating in the energy sector.
