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ISLAMABAD: The Auditor General for Pakistan (AGP) has pointed out that due to the interference of the former Special Assistant to Prime Minister Nadeem Babar without having any legal authority directed the Director General (PC) Petroleum Division to take decisions which were not in conformity with the policies but also resulted in an excess burden of Rs1.2 billion on the exchequer.

The audit says the impact of other cases where the DG (PC) had accepted third-party certification without any provision in the policy in vogue may be calculated and rectified by the management.

During the performance audit of the management of leases and licenses for the years from 2010-11 to 2019-20, it was observed that M/PEL submitted field development plan for Ayesha-I, Ayesha North, and Amina of Badin-IV South Block.

Govt executes petroleum concession agreement, exploration licences with E&Ps

The third-party consultant, IPR, certified the net present value (NPV) of the project with combined filed analysis under conventional price using a discount rate of 10 percent, ie, $24.129 million and marginal price of $28.134 million. DG (PC) due to the fact that concerned fields did not fulfil the criteria, refused to grant incentive. But later on, in June 2020, the meeting was held under the chairman of SAPM to seek advice on third-party consultant studies pending approval in DG (PC) and ways to improve and expedite the assessment process.

The SAPM in the said meeting directed that findings/recommendations/certification by independent third-party consultant would be final and binding in full conformity on the E&P companies and DG (PC).

The DG (PC) accepted the claim of M/s PEL and granted price incentives.

The audit is of the view that directing DG (PC) for accepting the third-party certification marred the independence of the regulator.

Further, question regarding SAPM chairing the meetings of public sector business and influencing the regulator to accept the third party certification is a sheer violation of the ruling given in the judgement of writ petition No. 2304 of 2020, wherein, the Islamabad High Court (IHC) ruled that an adviser has no role either in policy matters of a division or ministry nor its execution of running the business of the federal government in terms of Rules of Business 1973.

The DG (PC) replied on August 30, 2021, that guidelines clearly provide to deal each discovery or field separately and the assertion made by audit regarding joint economics of all the three fields is not in accordance with policy provisions.

Hence, all the fields were considered separately and decisions were made accordingly.

The audit rejected the reply of the Petroleum Division on the ground of standalone basis that the fields under question yield negative NPV at a discount rate of 10 percent even if price incentive of marginal gas field were granted which makes the field uneconomical.

Performance Audit Report on Management of Leases and Licenses by Director General, Petroleum Concessions (Ministry of Energy-Petroleum Division) for the period 2010-20 was laid in National Assembly on Thursday.

Copyright Business Recorder, 2024

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M.Aleem Khan hoti. May 18, 2024 05:45pm
Why the name of DG PC was kept secret in the entire story who granted10% concession.His name must be revealed to the public so that people get acquinted of the black sheep serving in govt ministries.
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