Page 21 - Condensed Interim Financial Statements - for the nine months ended March 31, 2024

Notes to and forming part of the Condensed Interim
Financial Statements (Unaudited)
For the nine months ended March 31, 2024

On December 27, 2017, the Ministry of Energy (Petroleum Division) notified certain
amendments in Petroleum Policy 2012 which also included addition of following
explanation of conversion package:
“the conversion package shall include (i) price of Natural Gas for New Exploration Efforts
(ii) windfall levy on Natural Gas (iii) EWT gas production, pricing and obligations (iv)
Windfall levy on Oil & Condensate, only for PCAs converting from 1994 and 1997
Petroleum Policies and (v) Financial obligations relating to production bonus, social
welfare and training”.
Under the said Notification, the Supplemental Agreements already executed for
conversion from Petroleum policies of 1994 & 1997 shall be amended within 90 days,
failing which the working interest owners will not remain eligible for gas price incentive.
On January 3, 2018, Directorate General Petroleum Concessions (DGPC) has required
all exploration and production companies to submit supplemental agreements to
incorporate the aforementioned amendments in Petroleum Concession Agreements
(PCAs) signed under 1994 and 1997 policies, for execution within the stipulated time as
specified above.
Based on legal advice, the Company is of the view that already executed Supplemental
Agreement cannot be changed unilaterally, the Supplemental Agreement was signed
under the Conversion Package where gas price was enhanced and Windfall Levy on
Oil/Condensate (WLO) was not applicable, the impugned SRO by giving retrospective
effect amounts to taking away the vested rights already accrued in favour of the
Company. The Government has no authority to give any law or policy a retrospective
effect. The Company filed Constitutional Petition challenging the imposition of WLO on
February 19, 2018 against Federation of Pakistan through Ministry of Energy
(Petroleum Division), Islamabad. The Honourable Islamabad High Court after hearing
the petitioner on February 20, 2018, directed the parties to maintain the status quo in this
respect. After multiple hearings, the case came up for hearing on May 24, 2022 before
the Honourable Chief Justice of Islamabad High Court, wherein matter was adjourned till
June 30, 2022, however the same could not be heard and next date of hearing is yet to be
announced.
On prudent basis additional revenue (net of sales tax) on account of enhanced gas price
incentive due to conversion from Petroleum Policy 1997 to Petroleum Policy 2012 since
inception to March 31, 2024 amounting to Rs 29,714,085 thousand will be accounted for
upon resolution of this matter (including Rs 25,265,875 thousand related to period since
inception to June 30, 2023). Additional revenue on account of enhanced gas price
incentive of Rs 26,354,512 thousand and sales tax of Rs 4,515,221 thousand received
from customer on the basis of notified prices has been shown under "trade and other
payables". Sales tax of Rs 4,515,221 thousand (June 30, 2023: Rs 3,928,026 thousand)
received from customer on the basis of notified prices is declared in the monthly sales
tax return as well as duly deposited with Federal Board of Revenue by the Company. The
amount so deposited is shown within "advances, deposits, prepayments and other
receivables".

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