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NOTES TO AND FORMING
PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2020
129
PAKISTANOILFIELDS LIMITED
Most of these abandonment and removal events are many years in the future and the precise
requirements that will have to be met when the abandonment and removal event actually occurs
are uncertain. Abandonment and asset removal technologies and costs are constantly changing, as
are political, environmental, safety and public expectations. Consequently, the timing and amount
of future cash flows are subject to significant uncertainty.
The timing and amount of future expenditures are reviewed annually, together with the interest rate
to be used in discounting the cash flows. Any difference between the liability recognized and actual
costs incurred are charged/credited to statement of profit or loss in the year of decommissioning.
The effect of changes resulting from revisions to the estimate of the liability are incorporated on a
prospective basis.
The decommissioning cost has been discounted at a real discount rate of 1.65% (2019: 4.03%) per
annum.
4.8
Employee compensated absences
The Company provides for compensated absences for all eligible employees in accordance with the
rules of the Company.
4.9
Staff retirement benefits
The Company operates the following staff retirement benefits plans:
(i)
A pension plan for its management staff and a gratuity plan for its management and non-
management staff.Thepensionandgratuityplans are invested throughapproved trust funds.
Both aredefinedbenefit final salary plans. Thepension andgratuity plans are complementary
plans for management staff. Pension payable to management staff is reduced by an amount
determined by the actuary equivalent to amount paid by the gratuity fund. Management
staff hired after January 1, 2012 are only entitled to benefits under gratuity fund. Actuarial
valuations are conducted annually using the "Projected Unit Credit Method" and the latest
valuation was conducted as at June 30, 2020.
Actuarial gain and losses arising from experience adjustments and change in actuarial
assumptions are charged or credited to equity in other comprehensive income in the period
in which they arise.
Past service costs are recognized immediately in statement of profit or loss.
Since both are complementary plans, combined details and valuation for pension plan and
gratuity plan are given in note 38.
(ii)
Separate approved contributory provident funds for management and non-management
employees for which contributions are made by the Company and the employee at the rate
of 10% of basic salary.
(iii)
These include charge against employee retirement benefits of Rs 103,205 thousand (2019:
Rs 97,202 thousand).