MP&NR audit: AGP detects Rs 119.6 billion less revenue collection, irregularities

The Auditor General of Pakistan (AGP) has detected Rs 119.6 billion less revenue collection, irregularities/laps on various accounts related to the Ministry of Petroleum and Natural Resources (MP&NR) during audit year 2015-16. According to key audit findings of the report on the accounts of the receipts of the MP&NR for audit year 2015-16 loss of Rs 86.17 billion due to non/short-realisation of Gas Infrastructure Development Cess (GIDC), Rs 8.16 billion loss due to non-realisation of liquidated damages and other obligations from Exploration and Production (E&P) companies.
Loss of Rs 3.56 billion due to short-realisation of royalty from E&P companies, loss of Rs 1.5 billion due to non/short-realisation of production bonus from E&P companies, Rs 7.5 billion due to irregular prescribed price notified by Oil and Gas Regulatory Authority (Ogra) and Rs 7 billion due to short-realisation of Gas Development Surcharge (GDS).
The loss of Rs 88.2 million recurred due to change in rules against public interest, loss of signature bonus due to irregular extension of Sui Lease without the concurrence of the province, loss of Rs 1.5 billion due to non/short-realisation of Petroleum Levy (PL) on sale of petroleum product and unauthorised refund of PL Rs 865 million.
The AGP has recommended the Ministry to take following steps: (i) take measures for legislation strictly in line with the Constitution, (ii) take action for early recovery of amount pointed out, (iii) establish internal audit wing and strengthen the legal cell to prevent recurring violations and irregularities, (iv) proactively co-ordinate with Ogra to safeguard the public interest while determining the final revenue requirements (v) maintain the company and each field's record for timely realisation of revenue and reconciliation and (vi) review the amendments made in Natural Gas (Development) rules, 1967 whereby the deposits of GDS was conditional with the payment received from vender.
The report said that according to Section 3 of Gas Infrastructure Development Cess Act, 2015 read with Section 8 (1) ibid, the Cess was to be levied and charged by the federal government from gas consumers, other than the domestic sector consumers, or the company at the rates provided in the Second Schedule to the ibid Act. The gas company was to be responsible for billing Cess to gas consumers, its collection from them and its onward payment to the federal government. Notwithstanding any omission to the contrary, contained in Gas Infrastructure Development Cess Act, 2011 (XXI of 2011), the Gas Infrastructure Development Cess Ordinance, 2014 (VI of 2014), the rules made there under, or anything to the contrary contained in any decree, judgement of any court, the cess levied, charged, collected or realised by the company from gas consumed under the aforesaid Act or Ordinance was deemed to have been validly levied, charged, collected or realized under the provision of this Act.
During the Financial Year 2014-15, the DG (Gas), Islamabad either did not recover or short recovered the Gas Infrastructure Development Cess from M/s MPCL, SNGPL, PPL and SSGCL in respect of gas sold by them. The irregularity/lapse resulted in non/short-realisation of Gas Infrastructure Development Cess of Rs 86.16 billion and corresponding loss to the Public Exchequer.
The irregularity/lapse was pointed out in November and December, 2015. The Department replied that Rs 2,532.47 million had been recovered out of which Rs 944.27 million were recovered prior to audit, hence were not due whereas, Rs 466.85 million were admitted for recovery in the case of M/s MPCL and M/s PPL while in the case of M/s SSGCL and M/s SNGPL it was replied that recovery was pending as the matter was sub judice and the respective courts having jurisdiction over the matter had issued orders to maintain status quo.
It was also informed that a committee had been constituted by the MPNR to decide the fate of GIDC withheld by the consumers with respect to previous laws. The decision of the committee was awaited. The Audit recommends immediate recovery of outstanding amount from the companies to accomplish the objectives of the cess besides initiating efforts for vacation of stay orders issued by courts.