Islamabad (by Ehsan Bukhari):
A staggering Rs 2.05 trillion worth of financial irregularities have been uncovered in Pakistan’s petroleum sector, according to a recent audit report by the Auditor General of Pakistan (AGP). The report highlights severe mismanagement and lapses in various projects and financial dealings within the sector.
One of the most significant issues identified is the unresolved inter-corporate circular debt, which has led to the accumulation of liabilities amounting to Rs 1,427 billion. Furthermore, Rs 350 billion collected under the Gas Infrastructure Development Cess (GIDC) was not utilized for transnational pipeline projects, as originally intended.
The audit also revealed that Sui gas companies failed to recover Rs 69 billion in dues. In another major concern, Sui Northern Gas Pipelines Limited (SNGPL) was found to have diverted Re-gasified Liquefied Natural Gas (RLNG) to the domestic sector—an action not in line with intended usage policies.
Violations of winter load management protocols caused losses amounting to Rs 53 billion, while delays in installing compression equipment at gas fields resulted in a further Rs 44 billion in losses. The Oil and Gas Development Company Limited (OGDCL) was also criticized for failing to reduce costs in unprofitable fields, causing a Rs 32.6 billion decline in profits.
The report pointed out that nine exploration and production companies failed to pay Rs 28 billion in royalty dues. OGDCL was also faulted for awarding contracts worth Rs 15.28 billion to inexperienced bidders and for a substandard technical bid evaluation process.
Additionally, the Petroleum Division failed to collect Rs 14.63 billion in petroleum levy from refineries, even though the amount had already been passed on to consumers. Other inefficiencies included Rs 10.45 billion wasted on an unnecessary pipeline project, Rs 9 billion in cost overruns due to pipeline delays, and Rs 7.49 billion lost because gas development schemes weren’t completed on time.
Despite the installation of submersible pumps, there was no increase in oil production, causing losses of Rs 2.3 billion. Furthermore, PSO and SNGPL failed to deposit Rs 1.5 billion in dividends, and OGDCL did not recover Rs 847 million from its joint venture partners.
The audit report recommends urgent action by the Petroleum Division to resolve the circular debt crisis, fast-track pipeline projects through appropriate forums, and address delays in critical OGDCL projects.
