Fishy deals unveiled in OGDC audit

An Oil and Gas Development Company (OGDC) audit report has found fishy deals in hiring of rigs and payments to their suppliers, showing poor management in dealing of business involving huge foreign exchange. The audit observed that OGDC paid irrationally higher rates to joint venture partners for rigs services against what it charged from its own rigs from its partners and, resultantly, caused loss of millions of dollars to the company.
The audit has questioned drilling department for hiring rigs for its drilling ventures at exorbitant higher rates. The report said OGDC drilling department paid $25,000 for rigs services to its joint venture partners, and for its own rigs it charged $12,000, less than fifty percent, from joint venture partners.
The audit is of the view that the drilling department needs to rationalise rigs services charges being paid to its joint venture partners. Besides questioning drilling department for paying more than industry practice to the joint venture partners the audit report noted that the company was paying millions of dollars per annum for standby arrangements to the rigs suppliers, mostly foreign companies. Paying more than what audit noted industry practices for rigs services to joint venture partners and payment of huge amount as standby arrangement to rigs suppliers are two key questions raised by the audit in its report.
The questions raised by the audit indicate poor working in OGDC. It also indicates that OGDC could save huge foreign exchange by putting in place a sound implementation procedure. Payment of millions of dollars against standby arrangement and irrationally higher payments to the joint venture partners show that state owned OGDC is being run on poor standards and procedures (SoPs).
The report said: "Finance department lacks a proper internal system for log of rigs operations which were invoiced and paid which carries a high risk of duplicate and wrong payments to the suppliers. It also noted that delay in verification of invoices of rented rigs carries high risk of excessive charges to their suppliers. The audit is of the view that the management needs to take corrective measures to put in place a sound system for verifications of invoices for timely payments to the rigs suppliers besides having a double check of invoices to avoid wrong or double payments of rented rigs".