SAB urges Kuwait Petroleum Corporation to reduce spending

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KUWAIT CITY, Nov 13: The State Audit Bureau (SAB) has recommended the Kuwait Petroleum Corporation (KPC) to rationalize spending, and avoid KPC’s exposure to the risk of default in the payment of its obligations towards lending banks and credit agencies, as well as to negotiate with borrowers to reschedule their dues, reports Al-Qabas daily. In a report prepared by the National Assembly on the financial situation of KPC and its subsidiaries, SAB explained that the value of financial assets at fair value (current and noncurrent) during the financial years under study (2018-2022) had decreased.

It explained that the total loans of KPC and its subsidiaries in the fiscal year ending in March 2022 amounted to KD 5,138,678, which is an increase of 63 percent over what it was in the fiscal year that ended in March 2018. The value of bank balances decreased by 14.7 percent. The interests of the recovered financing, with which KPC is compensated in return for investing its funds in the activity of exploration and production of crude oil and natural gas within the State of Kuwait since the fiscal year 1981-1982 until the fiscal year ending on 31/03/2022, amounted to KD 4,618,847.

This is a procedure outside the special decree regarding the financial bases related to the marketing of Kuwaiti crude oil and gas belonging to the state by KPC issued on 1/1/1981 and regulating the accounting transaction between KPC and the State of Kuwait. KPC’s investments vary between highly liquid investments (call accounts and shortterm deposits), financial portfolios, subsidiaries and associate companies, and depend on a set of approved controls and procedures and what is stipulated in the regulations and decisions issued in this regard and the direct powers granted to the Financial Investment Committee.

The fund’s invested balances for the foundation on March 31, 2022 amounted to KD 14,953,249, representing 29.6 percent of the total assets on the same date. SAB touched on the decrease in the value of financial assets at fair value (current and noncurrent) during the financial years under study to reach a value of KD 4,273,693 on March 31, 2022, due to the withdrawal of sums from the minister’s portfolio to meet the needs of KPC and its subsidiaries.

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