The persistent issue of the Kuwait Petroleum Corporation’s inability to collect revenues from its fuel sales to the Ministry of Electricity, Water, and Renewable Energy has been a recurring and challenging matter in recent years.
The absence of an agreement to collect dues and the lack of necessary procedures to ensure the accuracy of quantity readings among all parties contribute to the ongoing problem, leading to deficits and shortcomings, reports Al-Anba daily.
The Kuwait Petroleum Corporation (KPC) has identified that a substantial portion of the outstanding debt, amounting to 89% of the total balance for the fiscal year 2022/2023, is linked to the corporation’s sales of imported liquefied natural gas.
The main point of contention revolves around the inclusion of operational and capital costs of the permanent facility for importing gas from Al-Zour in the pricing equation.
Despite several coordination meetings held by KPC to address the issue and reach a resolution, the matter was escalated to the Council of Ministers.
The Council’s decision, based on the Economic Affairs Committee’s meeting, stipulated the need to return the issue to the Ministry of Electricity and Water for coordination with the Ministry of Finance, KPC, and the authorities managing fatwas and legislation. This comprehensive study aims to address the matter from all angles.
Meanwhile, an agreement was reached between KPC and the Ministry of Electricity and Water to issue invoices for imported liquefied gas, excluding the disputed costs, to prevent the accumulation of debts. However, by the end of the fiscal year 2022/2023, no invoices had been settled.
In July, the KPC communicated with the Ministry of Electricity regarding outstanding bills for gas sales, seeking information on the steps taken to implement the Council of Ministers’ decision.
Additionally, the KPC sent a letter to the Ministry of Finance highlighting the liquidity shortage on June 22, 2023. The proposal suggested the formation of a collaborative team to expedite payments and address outstanding issues with the Ministry of Electricity and Water.
The matter is of significance to KPC due to consistent inquiries from regulatory authorities, particularly the Audit Bureau. The Bureau noted that as of March 31, 2023, KPC’s claims on the Ministry of Electricity and Water amounted to 2.4 billion dinars.
The Audit Bureau consistently observes delays in KPC’s claim collection, contrary to the terms of the agreement, which mandates invoicing in US dollars and requires the Ministry to settle invoices within 30 days without objection, claim, deduction, or withholding, as outlined in Clause No. 11 of Annex No. 6.