LPG scam brewing

The Public Accounts Committee (PAC) on Tuesday directed the Ministry of Petroleum and Natural Resources to come up with a comprehensive report on allotment of LPG quotas in the past and showed serious concerns over unspent amount of Rs 180 billion collected under Gas Infrastructure Development Cess (GIDC) and outstanding dues of SSGCL against K-Electric. The committee, chaired by Syed Khursheed Shah, examined the audit reports of the Ministry of Petroleum and Natural Resources for year 2013-14.
Secretary Petroleum Arshad Mirza was present before the committee for settlement of audit accounts. Public Accounts Committee directed the Ministry to provide a comprehensive report in its next meeting on Petroleum on Liquefied Petroleum Gas (LPG) quotas allotted to private companies in the past.
One of the members of Committee, Junaid Anwar Chaudhry, said people who had been allotted out-of-turn LPG quotas in the past should be taken to task. He believed it would be an 'LPG Leak'. Other Members Shafqat Mahmood and Mian Abdul Manan also seconded and demanded the committee to form a committee which would investigate the 'LPG quota scam'.
Responding to members committee, MD OGDCL Zahid Mir said that OGDCL's LPG daily production was 425 tons. Out of total quantity, 380 tons (90 percent) of production was auctioned to private companies on a signature bonus basis. The remaining 45 tons goes to three companies- Walk Gas, Sun Gas and Cap Gas without tendering due to a court stay. "The management of OGDCL vacated stay orders in relation to eight companies that had moved the court against the new quota allotment policy of the OGDCL," he added.
In new practice, LPG tenders were offloaded to parties of equal quantities on a signature bonuses basis. They discontinued early practice of awarding LPG quotas. The element of cartelization was not there; however, sometimes the companies overbid the price, he maintained. The MD further explained that a new plant of OGDCL would start extracting LPG within two months. The actual date of completion of plant was 2013-14 and it was delayed due to litigation.
While examining another case, the committee directed MD OGDCL to take the matter of payment of Late Payment Surcharge (LPS) along with actual receivables to its board. The MD OGDCL told the committee that LPS was used as leverage to receive their payments but it did not reflect in the profit and loss accounts. He maintained that the management never received LPS.
The committee members were of the view that the OGDCL must receive the LPS along with actual amount as it was a provision available in the Gas Purchase Agreements (GPA). The committee referred the matter to its board. The committee also observed that Rs 101 billion additional GIDC was unjust and an additional burden on consumers as Rs 180 billion remained unspent with Ministry of Finance for construction of transnational Iran-Pakistan Gas Pipeline.
Chairman Committee Khursheed Shah said it was unfortunate that GIDC, education cess and other cesses remained unspent and did not meet the objective of infrastructure development.
Secretary Petroleum said it was Ministry of Finance subject; however, the Ministry has recently submitted a claim for the amount. Member Committee Naveed Qamar said it was a biased policy that GIDC was imposed on domestic production which was ultimately paid by the domestic consumers but not on imported gas. The prices of domestic and imported gas were almost the same.
Secretary said Finance was the Ministry which could respond to this. But, it might be rationalising the over-subsidised sectors. Audit officials said the AGP would hold a special audit on 'Inventory Management of OGDCL' next year. Audit observed that stores and spares increased from Rs 13.89 billion in 2010-11 to Rs 12.86 billion in 2011-12 and Rs 16.63 billion in 2012-13. Resultantly the provision for 'slow moving' and obsolete stores increased from Rs 1.55 billions in 2010-11 to Rs 2.16 billion in 2012-13. The increasing trend in the provision of 'slow moving' and spare parts indicated that the same were procured in excess of the actual requirements.
Examining the audit observations on Sui Southern Gas Company Limited's (SSGCL) accounts, the committee directed the NEPRA and federal adjuster and Secretary Water and Power to appear in case of outstanding dues of K-Electric. MD SSGCL disclosed that SSGCL's outstanding dues against K-Electric (25 percent government holding) stood at Rs 65 billion. The company did not disconnect the supply of gas to K-Electric in the interest of consumers. Audit officials further said that K-Electric denied access to auditor for carrying out an audit.