Gas companies on hit list of PAC

ISLAMABAD: The Public Accounts Committee (PAC), headed by Junaid Akbar, has accused the government of extending undue favor to fertilizer companies by not revising or rationalizing the cost of gas for three years, sources told Newzshewz.
These comments were made by the PAC during its meeting on February 18, 2025, in which various issues in the energy sector were discussed.
According to sources, the audit pointed out that during the audit of DG (Gas) for FY 2022-23, it was observed that DG (Gas) had collected GIDC amounting to Rs 354.047 billion by June 30, 2023. However, the federal government could only utilize Rs 3.344 billion for the operational costs of ISGSL and the repayment of its loan to GHPL. These funds were meant to be used for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, Iran-Pakistan pipeline (IP), and Pakistan Stream Gas Pipeline Project (PSGP). However, progress on these major gas infrastructure development projects was very slow, and no significant headway was made, resulting in the non-utilization of Rs 350.703 billion of the GIDC funds.
The members expressed concern over the operational expenditure of Rs 3.3 billion incurred from the GIDC and directed the PAO to provide a comprehensive briefing on all aspects of these projects, or any other proposals and way forward, keeping in mind the observations of the committee members. These issues would be discussed in subsequent PAC meetings.
Audit also pointed out that during the audit of DG (Gas), it was observed that DG (Gas) had not collected GDS amounting to Rs 33,915 million from various companies for gas sold to fertilizer and power companies. Furthermore, no time had been prescribed for companies to pay the GDS collected from consumers. This gave companies leeway to withhold the GDS.
On the issue of Mari Petroleum Company Limited (MPCL), the PAC was informed that the company was invoicing its customers at the notified gas sale price, which was lower than or equal to the prescribed prices, particularly where gas was sold as feedstock for fertilizer, resulting in a negative differential of Rs 14.745 billion. In the case of fuel stock and sales to power companies, the gas sale price was higher than the prescribed price, resulting in a positive differential of Rs 15.948 billion. Evidently, the company could not book a loss of Rs 14.745 billion while also incurring a liability of Rs 15.948 billion, as the government had not budgeted for a subsidy to cover the sale of gas below prescribed prices.
Pakistan Petroleum Limited (PPL) stated that GENCO-II had consistently defaulted in settling gas sales bills on time, which prevented PPL from making timely payments of GDS to the government treasury. PPL management is vigorously pursuing GENCO for settlement of the circular debt.
According to the DAC, management stated that the recovery of GDS from power companies was pending due to circular debt in the power sector. To adjust the negative GDS by MPCL and other gas companies, amendments to the GDS Ordinance of 1967 had been initiated. This matter has to be taken up at the level of the Council of Common Interests (CCI) because it involves provincial revenue receipts in the form of GDS.
Audit contended that MPCL had adjusted a negative GDS of Rs 14.745 billion, which was not covered under the law in force. PPL and MPCL had also not made payments of GDS amounting to Rs 23.965 billion, despite receiving payments from power companies for gas invoices. The DAC directed management to expedite the recovery of Rs 23.965 billion from the power sector in respect of gas supplies by PPL and MPCL, and to pursue the matter regarding amendments to the GDS Ordinance of 1967.
After detailed discussion, the PAC made the following recommendations/ directives ;(i) the PAC observed that non-realization of GDS by the Federal Government deprives the provinces from its due share ;(ii) the non-revision / rationalization in the cost of gas for three years was termed as undue favour to the fertilizer companies; (iii) the Committee expressed serious concern over the non-holding of Council of Common Interest meetings within 90 days despite Constitutional obligation as the amendment in the GDS, Ordinances are to be taken up at the level of CCI involving provincial revenue receipts and directed the PAO to convey the strong reservation of the PAC to the Secretary, M/o Inter-Provincial Coordination and directed to take up the matter with the Prime Minister immediately; (iii) the Committee also took strong note of the inability of the representative of M/o Law and Justice to respond to the questions of the Member with regard to amendment in the Law and directed to convey the displeasure of the Committee to the Secretary, M/o Law and Justice with the direction to depute a senior level officer well- versed with the Law especially in the cases identified in the Audit brief in the future ;(iv) the Committee directed the PAO to hold a fresh DAC within 30 days to discuss the issue pertaining to Power Division and that the presence of Secretary, Power Division shall be ensured in the next meeting of PAC relating to this matter.
Audit also pointed out that during audit of DG (PC) for the FY 2022-23, it was observed that DG (PC) did not realize royalty on natural gas and crude oil from nine E&P companies on accounts of 68 blocks / fields on sale of natural gas and crude oil. This resulted in non- realization of Royalty and fine amounting to Rs 27.966 billion.
Management replied that an amount of Rs 18.325 billion were recovered from OGDCL (Rs 8.276 million), UEPL/BOW/AROL (Rs 9.676 billion), Zaver and OPI (Rs 286 million and Spud Energy/ OGIL (Rs 87 million.
Management further stated that out of Rs 27.966 billion, an amount of Rs 20 billion had been recovered. Ends