Sui Northern Gas Pipelines Limited (SNGPL) has issued a clarification regarding recent media reports concerning Cost Equalization Adjustment (CEA) expenditure and a related decision by the Lahore High Court (LHC).
According to the company, the matter relates to a disputed tax demand stemming from the disallowance of CEA by the tax authorities. SNGPL explained that the CEA was remitted to Sui Southern Gas Company Limited (SSGCL) under a mechanism introduced in 2003 on the direction of the Economic Coordination Committee (ECC) and approved by the Federal Government and the Oil and Gas Regulatory Authority (OGRA).
The mechanism was designed to maintain uniform gas pricing across the country.
Historical Expenditure, No New Financial Impact
SNGPL emphasized that the expenditure in question is historical and has already been recognized in the company’s financial statements. The related costs were also reflected in OGRA’s tariff determinations for the relevant periods.
As a result, the company said the matter will not create any additional financial impact on its current or future profitability. SNGPL further clarified that the recent court development does not result in any new financial obligation, liability or accounting adjustment.
Lahore High Court Rules in SNGPL’s Favor
The company also highlighted that the Lahore High Court decided the matter in SNGPL’s favor. The court held that the disputed expenditure qualifies as having been incurred “wholly and exclusively for the purpose of business.”
This ruling supports SNGPL’s position regarding the nature of the CEA expenditure and its treatment for tax purposes.
Company Says Financial Position Remains Unaffected
SNGPL said the reported development has no bearing on its current or future financial position. The company stressed that the matter has already been accounted for and is financially neutral from its current and future profitability perspective.
The gas utility also confirmed that it remains compliant with applicable regulatory and disclosure requirements. It stated that the reported news should not be considered material price-sensitive information because the issue is historical, already accounted for and does not create a new financial obligation.
The clarification was issued to the Pakistan Stock Exchange and the Securities and Exchange Commission of Pakistan to ensure that market participants and TRE Certificate Holders are properly informed about the matter.
