Finance Division Wants Bank Guarantees for Settlement of Cnergyico’s Unpaid Petroleum Levy

The Finance Division has instructed Cnergyico Pk Limited to furnish bank guarantees to settle Rs. 47.5 billion in petroleum levy (PL).

Cnergyico hasn’t paid any PL since 2019, with the accumulated amount spanning over the last four and a half financial years, reported TheNews.

The government has tried to recover the owed amount but the refinery has taken refuge with the court.

Despite the Finance Division’s strictness on the matter, the Petroleum Division has recommended a Deed of Settlement offered by Cnergyico to settle the dues. The refinery intends to pay Rs. 225.2 million upon approval and Rs. 790 million per month for over five years.

By offering postdated cheques as guarantee for the payment plan, Cnergyico presented the deed to take advantage of incentives under the Brownfield Refinery Policy for related upgrade incentives. However, the Finance Division wants bank guarantees instead of postdated cheques to ensure timely payments. The Oil & Gas Regulatory Authority has also supported the Finance Division’s stance.

The Finance Division has also asked for a reduction in the payment duration from five to three years and a late payment surcharge in the installment plan. This adjustment is estimated to increase the outstanding amount by over Rs. 60 billion.

Despite objections from the Finance Division, the Petroleum Division has favored Cnergyico’s proposed deed of settlement.

The Finance Division’s insistence on bank guarantees stems from Cnergyico’s previous legal challenges when the government tried to recover the owed amount. Efforts were made by the Finance Division, Federal Investigation Agency (FIA), and Ministry of Interior in 2020, 2022, and 2023 respectively to recover the amount through legal means. This time around, authorities seek bank guarantees to ensure repayment of all outstanding dues in the period mentioned above.

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