ISLAMABAD: The Petroleum Division (PD) has referred "excess" payment of the Pakistan State Oil (PSO) to LNG supplier case to its board of directors for a forensic audit.

According to the PD, the board of directors has been asked for a detailed forensic audit to establish how an "illegal" practice was continuing for the last five years, and why the previous managing director (MD) PSO and the present PSO management failed to take any remedial measures.

Another LNG importer, Pakistan LNG Limited (PLL), has also started the process of recovering the excess charges paid.

The PSO signed a contract with Gunvor and the PLL signed a contract with Eei in 2016.

Under these contracts, port charges upto USD 0.5 million per vessel were to be borne by the suppliers and any excess was to be paid by the importer, i.e., the PSO and the PLL.

During the previous government, port charges in excess of USD 0.5 million were claimed by the suppliers and reimbursed by the PSO and the PLL.

The total amount was approximately USD 40 million, starting from 2016.

In 2019, the Pakistan Tahreek-e-Insaf (PTI) government directed the PSO/PLL to look at all the charges to see how they could be reduced.

In this process, it was revealed that some of these excess charges, which were indeed paid to the PQA, could be excluded from the definition and would, therefore, became the responsibility of the suppliers under the legal interpretation.

Upon direction of the Ministry of Energy, the PSO and the PLL took up the matter with the suppliers, who disagreed with this interpretation.

The PSO has since adjusted these charges from its supplier, Gunvor.

The division claims that the present government has made recovery of excess payments initiated by the previous government beyond the strict legal obligations under the contract.

More than half has already been recovered, while the rest is in process.

Copyright Business Recorder, 2020