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ISLAMABAD: The Petroleum Division has failed to recover billions of rupees from exploration and production companies in the oil and gas sector on account of royalty, training fund, and social welfare on 40 wells.

The Prime Minister Secretariat as well as the Public Accounts Committee (PAC) directed repeatedly to the Petroleum Division for recovery pending against a number of E&P companies.

No response was received from the division on the query sent by Business Recorder.

Audit Report 2021-22 of the Petroleum Division also observed that the DG (PC) Petroleum Division did not recover royalty on oil and gas from nine E&P companies in 40 fields. This resulted in non-realisation of royalty amounting to Rs10.7 billion.

Evolution, challenges, and prospects of oil and gas exploration sector

M/s Spud Energy default on account of payments of royalty pertaining to the previous year but DG (PC) did not initiate any action except issuing a letter for re-legalisation of royalty. In another case, the DG (PC) did not recover fine on late payment of royalty on oil and gas from the GHPL in Gambat South Block under E&P Rules 2009. This resulted in the non-realisation of royalty and subsequent fine amounting Rs0.672 million.

In March 2023 report to the Prime Minister Secretariat, Rs44,439 million worth of royalty was outstanding obligations against these companies. In April 2023 again, Prime Minister Secretariat expressed serious concern over the accumulation of unpaid obligations on accounts of royalty, training fund, social welfare and production bonus to the tune of Rs44 billion and $16.27 million and directed the Petroleum Division to recover the amount. In line with the directives of the prime minister, the Petroleum Division had written various letters to these E&P companies.

In a letter to PEL (Pvt) Limited asked payments of royalty in respect of Badar, Block-22 Sukkar and Baddin IV South.

On January 2023, in another letter directed PEL to deposit the outstanding amount of social welfare obligations of $455,818 in the joint accounts of concerned DCs/DCOs pertaining to the financial year 2021-22 against Kandra, Salam, Badin-IV (Ayesha, Aminah), Badar and Balock-22 (Salam, Sadiq, Khanpur).

M/s FHL and M/s Spud Energy cleared Rs1,025 million royalty, social welfare, training and area rental, however, M/s PEL cleared only Rs376 million. These recoveries have been made from February 2023 to June 2023.

Copyright Business Recorder, 2023

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