‘Undue benefits’ to PEL: AGP asks PD to conduct inquiry

ISLAMABAD: The Auditor General of Pakistan (AGP) has asked the Petroleum Division to conduct an inquiry and hold individuals accountable for granting an undue financial benefit of $13.273 million (equivalent to Rs3.9 billion) to M/s PEL in violation of the Marginal Field Guidelines 2013.

During an audit of the Director General (DG) Petroleum Concessions (PC) for the fiscal year 2022-23, it was discovered that the DG (PC) retrospectively granted a price incentive to M/s PEL on Block-22 effective July 1, 2016, despite the company’s application for the incentive being submitted on June 3, 2020.

The audit findings revealed that the DG (PC) erroneously allowed price incentives with retroactive effect, contradicting the guidelines and providing M/s PEL with an unjustified financial advantage.

In response to the audit observations, the management claimed on December 12, 2023, that the operator was entitled to marginal field pricing subject to certification by a third party.

They asserted that the third party had certified the field as marginal, leading to the approval from the secretary Petroleum Division.

However, according to Para E of the Marginal Field Guidelines 2013, the marginal price incentive is only granted upon fulfilling specific conditions, including certification that the gas cannot be produced naturally through conventional methods at commercial rates.

In light of these findings, the AGP has recommended that an inquiry be conducted to identify the individuals responsible for the violation.

Copyright Business Recorder, 2024