Company News

BYCO ALREADY SETTLES PART CIRCULAR DEBT WITH OGDC - NO LEGAL NOTICE SERVED

Thursday August 9, 2012

With reference to the news item, ‘Pay up, or else: OGDC serves legal notice on Byco for unpaid dues’ published in The Express Tribune (August 9, 2012), the management of Byco Petroleum Pakistan Limited, (BPPL) would like to highlight the incorrect facts reported in the news item.

First of all, no legal notice has been served on BPPL. Moreover, OGDC’s receivables have over time soared to Rs. 165 billion, of which only Rs. 5.5 billion is payable by BPPL and that too because of inter-company circular debt under which equivalent or more amount of BPPL’s money is held up with PSO.

We would like to inform you that as per the Circular Debt Mapping Methodology, initiated by the Ministry of Petroleum, BPPL’s receivables from PSO to the extent of Rs. 2.6 billion out of the total outstanding of Rs 5.8 billion were proposed to be adjusted against OGDC’s dues. BPPL gave its consent and approval to the Ministry of Petroleum’s proposal, on June 28, 2012 and passed instructions to National Bank of Pakistan for this adjustment. Thus insofar as BPPL is concerned, it has already surrendered funds to the extent of Rs. 2.6 billion (partial receivables from PSO) in favor of OGDC for adjustment against principal outstanding amount payable by Byco.

Additionally, BPPL is the only refinery which has proposed to work on L/C basis for procurement of crude oil from OGDC. This mechanism is expected to keep the payment secured and current under a given set of commercial terms. BPPL is also the only refinery to have made such offer. All other refineries work on unsecured credit obtained from OGDC for supply of its crude.

It is indeed surprising that none of the other refineries that owe huge sums of money to OGDC have been mentioned in the news item. The total receivables of OGDC from other refineries is about Rs. 97.6 billion.

It is unfortunate that the project which will soon become the country largest refining group is being subjected to discrimination and unfair treatment.

The management would also like to protest that though all refineries owe money to OGDC yet crude oil is still being supplied to these refineries, except Byco. Such an approach is unfair and discriminatory. It also dampens the motivation of any investor to put up sizeable projects in Pakistan.