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