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Corp situation exposes risks of inability to meet financial obligations
KUWAIT CITY, Feb 20: Kuwait Petroleum Corporation and its subsidiaries invest their surpluses in short-term and long-term deposits at specific interest rates agreed upon with local banks, reaching a balance of KD 540 million in the fiscal year that ended on March 31, 2022, which is an increase of 45.5 percent compared to 2018, reports Al-Anba daily. According to official financial data, the cash and deposit balances of KPC were greatly affected during the last period by the changes that occurred in KPC in the recent years, in addition to the impact of its cash flows on operations, financing and investment that took place during that period, and also after being affected by the results of its other investments, which was reflected adversely, affecting its liquidity and financial solvency.
Cash flows In this regard, the studies on cash flows during the five years (2020/2021 to 2024/2025) referred to in the review submitted by the work group, which is studying the financial situation of KPC, predicted a financial deficit estimated at about KD 10 billion, taking into account the volume of capital expenditure to be financed and other obligations.
This situation exposed KPC to the risks of inability to meet the financial obligations of contractors, lenders and the state. The revenues achieved by KPC during the past fiscal year amounted to KPC 1.5 million. KPC has the highest deposits with KD 513.5 million, followed by the Kuwait National Petroleum Company with KD 15.9 million, the Gulf Oil Company with KD 5.02 million, and then the Kuwait Petroleum Corporation (Aruba) with KD 3.9 million. In the past, KPC’s deposits recorded the highest historical level at KD 626.2 million in 2019, achieving annual returns of KD 4.5 million. In total, KPC and its companies realized returns from bank deposits amounting to KD 17.4 million during the past five years.
It was noted that the returns achieved for KPC’s deposits decreased as a result of low interest rates that coincided with the outbreak of the COVID-19 pandemic. On the other hand, cash and current account balances in the last fiscal year amounted to KD 401.7 million, which was a decrease of KD 330 million compared to KD 600.2 million in the past. It also achieved returns of KD 158,000, compared to achieved returns of KD 7.6 million in 2018 when the total deposits amounted to KD 7.324 billion. In addition, the revenues achieved from cash and current accounts decreased by about 98 percent compared to the interests achieved in the fiscal year that ended on March 31, 2018.