AGP blames finance ministry for Rs1.535tr irregularities

Identifying over Rs1.535 trillion worth of irregularities and revenue losses in oil and gas sector during the first year of incumbent government, the Auditor General of Pakistan (AGP) blamed the Ministry of Finance for non-production of record for audit, high debt build up and distribution of unauthorised bonuses to its staff.

In its report for the audit year 201920 that was laid before the National Assembly after a delay of almost eight months, the AGP said the finance ministry did not provide, despite repeated requests, record for audit relating to at least 13 major heads for FY19.

The record which was not produced to the audit included final reconciled expenditure statements, all types of investments by finance ministry, completion and progress reports of projects, staff and consultants etc appointed on contingent basis, temporary advances allowed during the year, outstanding recoveries, details of national and international bonds and loans and interests and refunds paid to exporters and importers.

The audit observed that data showed the country's public debt by end-March 2019 stood at 74.2 per cent of the GDP which was much higher than 60pc to be achieved under the Fiscal Responsibility and Debt Limitation Act.

Also, the audit report said the finance ministry over deducted collection charges and made lower payments to provinces to the extent of Rs7.3 billion during FY19 on account of divisible pool tax shares. It said the finance ministry directed the State Bank of Pakistan to credit into the non-food accounts of the provinces their shares of the tax revenue as per National Finance Commission after deduction of 1pc collection charges.

However, the audit observed that Rs12.75bn were deducted more on collection charges, depriving the provinces of Rs7.259bn. The audit said the ministry made irregular payment of honorarium worth Rs264 million to its employees during FY19. The audit demanded a proper inquiry into these irregular and unauthorised payments and non-production of record for audit to fix responsibility.

Likewise, the AGP found serious financial management weaknesses in the Petroleum Division as "no mechanism was in place for monitoring the assessment and collection of revenue receipts, recovery of areas of gas development surcharge, gas infrastructure development cess, petroleum levy and royalties".

It said the Oil and Gas Regulatory Authority (Ogra) had its own internal audit department to keep proper check and balance on functions of its departments but it failed to perform its key role and performed only pre-audit function. The audit found 16 major cases of non-recovery of receivables from consumers by public sector enterprises (Oil and Gas Development Company Ltd (OGDCL), Pakistan State Oil (PSO), Sui Northern Gas Pipelines Ltd, Pakistan Petroleum Ltd and Sui Southern Gas Company Ltd) were noticed amounted to Rs793bn during FY19.

Also, it reported audit findings for unlawful production of petroleum products either on expiry of drilling and production lease or at extended well testing stage worth Rs142.4bn while another non-recovery of nontax receipts under different heads of accounts was reported worth Rs146bn.

The AGP identified mismanagement in regassified liquefied natural gas (RLNG) business, exposing public sector entities to financial risk resulting in accumulation of huge arrears of Rs106bn. It also reported non-recovery of late payment surcharge by the PSO from various customers amounted to Rs87bn.

In addition, OGDCL management delayed development of 12 fields discovered since 1989 to 2016 due to non-initiation of production of petroleum resulting in loss of potential revenue of Rs69.5bn.