ISLAMABAD: The Petroleum Division is in the process of finalising the draft of a new Petroleum Levy Ordinance, 2020, in consultation with the Law Division to incorporate some of the observations submitted by the 'Commission on shortage of petroleum products in Pakistan', revealed Secretary Petroleum Dr Arshad Mahmood in a meeting of the sub-committee on Public Accounts Committee (PAC) held here on Thursday under Convener Syed Naveed Qamar.

A draft Ordinance has been formulated by legal section of the Petroleum Division in consultation with the Petroleum Division, which has been circulated last month to the relevant directorates and Oil and Gas Regulatory Authority (Ogra) for input.

The Law Division advised that several amendments are required therein, including late payment surcharge (LPS) and change of authority from the Petroleum Division to the Ogra.

The secretary shared the information, while responding to an audit para where LPS was part of the Federal Excise Act, 2005 but not included in the Petroleum Levy Act.

The Federal Excise Act 2005 says every licensee was obliged to pay a petroleum levy, which was to be deposited by the registered persons in the designated branches of the bank at the time of filing of returns by 15 day of the following month.

If a person did not pay the duty due or any part thereof within the prescribed time, he was obligated to pay, in addition to the duty due, a default surcharge at the rate of Kibor plus three percent of the duty due.

In response to an audit para related to non-realisation of gas infrastructure development cess (GIDC) in audit report of the Petroleum Division for year 2013-14, the secretary said that Rs356 billion was stuck in various court cases and Rs329 billion was recovered till April 2021 against total collection of Rs795 billion.

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Even five government-owned companies did not pay the GIDC to the government.

The Director General (Gas) Petroleum Division said that the Sindh High Court (SHC) stopped the federal government from collection.

He maintained that the government had decided to carry out a forensic survey into various claims of the defaulters, who claimed that they did not collect the GIDC from the consumers.

He said the one section of judgement of the Supreme Court of Pakistan gave the defaulters opportunity to obtain stay from the lower courts.

He said the division asked the Law Division to allow them hiring of well-known corporate lawyers to contest case in the apex court but the division insisted to contest the case with designated lawyers.

Circular debt for gas sector reached Rs1.1 trillion including Rs374 billion of both gas companies- the Sui Northern Gas Pipeline Limited (SNGPL) and the Sui Southern Gas Company (SSGC) and the Petroleum Division has proposed the government various measures for the retirement of debt, Secretary Petroleum Dr Arshad Mahmood said.

The secretary contended that the market was available for flare gas in the country.

“We need regulation for marketing the gas, whose transportation is dangerous and requires safety precautions,” he added.

He suggested that flare gas was useless and could be utilised by the private sector, which has shown interest.

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Earlier, the committee was apprised that the total share of flare gas in the overall product of gas is only one percent as most of the unused gas returned by the power sector was recycled and supplied to the other sectors.

The audit report pointed out that the Oil and Gas Development Company Ltd (OGDCL) had suffered a financial loss of Rs2.6 billion at Qadirpur Gas Field due to flaring the gas.

During audit of the OGDCL for the financial year 2016-17, it was observed that the management flared 10,751,92275 mmcfd gas valuing Rs2.6 billion from the field during the last three years from 2014-15 to 2016-17.

The management of the OGDCL failed to frame and submit any flare gas utilisation plan to the government as required under Flare Gas Utilisation Guidelines 2016.

The committee asked the DG (PC) Petroleum Division to submit a technical report on the issue with a calculation of royalty on flared gases.

Copyright Business Recorder, 2021