Receivable on account of first fill of Hub Power Company Limited (HUBCO) pipelines of Rs. 802 million (June 30, 2005 : Rs. 802 million).

Under clause 6.7 (b) of the Fuel Supply Agreement (FSA) of 1992 the Company supplied 128,000 metric tons of furnace oil as “First Fill” at no charge to HUBCO in 1996. The stocks supplied were duly acknowledged by HUBCO through their certificate Ref. No. 1182.GJB and 1262 GJB dated November 25, 1996 and December 19, 1996 respectively. WAPDA through a letter dated August 5, 1992 jointly signed by WAPDA and the Company undertook to pay the cost of First Fill to the Company. However, subsequently
WAPDA, through its letter No. GM/WPPO/CE-1/14624-26 dated December 5, 2001 refused to pay the amount on the contention that the project was first conceived on Build, Operate and Transfer (BOT)
basis but later converted to Build, Operate and Own (BOO) basis under the Power Purchase Agreement (PPA) between WAPDA and HUBCO and therefore ownership of the project including fuel inventory at the end of PPA terms now remained with HUBCO, and WAPDA was not liable for First Fill to the Company. As against the WAPDA’s contention, the Company is of the view that the cost of First Fill is to be paid by WAPDA as per the letter referred above jointly signed by both the parties. The MoP & NR through its
letter dated November 17, 2003 advised the Company that the amount due from WAPDA would be paid by the Ministry of Finance (MoF) within two years. The Company is following up the matter with the MoF. The MoP & NR vide its office memorandum dated February 7, 2005 has advised the Finance Division to take necessary action in order to implement the aforesaid decision of ECC. In view of the decision of the ECC, the Company considers that the balance will be recovered in due course of time.

Receivable on account of price differential between the products Low Sulphur Furnace Oil (LSFO) and High Sulphur Furnace Oil (HSFO) of Rs. 3,461 million (June 30, 2005: Rs. 3,461 million) initially due from WAPDA.

In accordance with the decision of ECC dated November 4, 2003, the Company was allowed to recover this amount through a pricing mechanism after recovery of the amount outstanding against its claims for Import Price Differential referred in note 6.2. Although no recovery has been made on this account, the Company continues to follow up the matter with MoP & NR. The Company has also submitted an independent report on the verification of the above claim to MoP & NR, upon their request. In view of the above, the Company considers that the above amount will be recovered in full in due course of time.

The Company has been extended a loan facility through Ministry of Finance (MoF) and MoP & NR for import of POL products. The foreign exchange allocation for these products is guaranteed by the SBP and GoP. Repayment of principal amount, financing cost and foreign exchange risk are the responsibility of MoF, GoP.

The status of the loan facility at December 31, 2005 was as follows:

DATE OF AUTHORISATION

The financial statements were authorized for issue on February 7, 2006 by the Board of Management (Oil) of the Company.

DIVIDEND

The Board of Management (Oil) in its meeting held on February 7, 2006 has declared 2nd interim dividend of Rs.5/- per share for the year ending June 30, 2006, amounting to Rs. 858 million. These financial statements do not include the effect of the aforesaid dividend.