Auditor General of Pakistan (AGP) has detected more than Rs 37.7 billion loss due to inadequate assessment system of royalty on oil and gas, petroleum levy non-realisation and misclassification in Ministry of Petroleum and Natural Resources. Audit Report-2010-11 on the account of receipts of Ministry of Petroleum and Natural Resources showed that there is Rs 14.756 billion short realisation due to inadequate system of assessment of royalty on oil and gas.
According to the report, there is only short realisation royalty of Rs 14.6 billion of OGDC from period July, 2007 to April, 2010. The report says that the field-wise date of production; sale and royalty processing charges was required for calculation of royalty.
The DG (PC) did not maintain such data to check accuracy of accrued liability and recovery of royalty by E&P companies. The department relied entirely on the data provided by E&P companies and merely recorded the payment challans of royalty as paid by E & P companies without assessing actual payables. Developing of data base and recovery of royalty due to government was emphasised.
In the Departmental Accounts Committee (DAC) meeting held in February, 2011, the department informed that an amount of Rs 14.68 billion had been realised while Rs 0.266 million adjusted. The remaining amount was stated to be not due. The Department further informed that systemic improvement had been put in place due to which the tracking system and monitoring mechanism had become relatively efficient. DAC directed the department to get position verified by the Audit within a month. But no progress was received till finalisation of this report.
In another case, the report says that Rs 9.176 billion non-realisation was made due to poor monitoring of petroleum levy. Audit found no internal control was in place for maintaining and updating month-wise data of accrued liability of petroleum levy and its recovery. Further, Audit was unable to find refinery/company-wise data for calculation of petroleum levy. The department accepted the data provided by refineries/companies without scrutiny. Recoverable and payments by oil marketing companies were not reconciled. Further, even as per data provided by refineries, the department did not realise petroleum levy of Rs 7.5 billion from Pak Arab Refinery Ltd and Rs 1.652 billion from BYCO Pakistan Ltd aggregating Rs 9.176 billion.
In the DAC meeting held in February, 2011, the department informed that an amount of Rs 6.681 billion had been deposited by Parco. Department further informed that the outstanding amount from the OMCs is due to circular debt. DAC observed that there was room for improvement in tracking the receipts and their analysis at the level of MPNR. The DAC directed that necessary monitoring mechanism may be put in place and get the stated recoveries verified by Audit within one month. No progress in this regard was received made by the department till finalisation of this report.
Similarly, Rs 6.67 billion non-realisation was due to inadequate monitoring of discount retained on crude oil price from refineries. The report says that the assessment of discount retained on crude oil was being made by refineries and the Ministry devised no procedure to verify the assessment and recovery of discount retained on crude oil. Resultantly, the department did not recover discount retained on local crude oil/condensate price which was withheld by the refineries. This caused non-realisation of government revenue of Rs 5.886 billion from ARL and Rs 731 million from PRL aggregating Rs 6.62 billion. No progress was, however, received by Audit till finalisation of this report.
In the DAC meeting held in February, 2011, the department did not intimate any progress of recovery of principal amount from ARL. About PRL, it was stated that the refinery had committed to make payment by 15.2.2011. The DAC directed DG (Oil) to monitor the recovery and inform progress to conduct Audit within one month. But no progress was made till finalisation of the report. The report also showed loss of Rs 1.32 billion due to inadequate system of monitoring of windfall levy, Rs 3.967 billion non-realisation due to poor monitoring of GDS and other cases of billions of rupees.