NAB starts comprehensive probe into OGRA affairs

Unauthorised grant of CNG licences, gas theft, allegedly caused Rs52b loss.

ISLAMABAD:

The National Accountability Bureau (NAB) has started a comprehensive investigation into alleged irregularities in the Oil and Gas Regulatory Authority (Ogra), which have inflicted a loss of Rs52 billion to the national coffers as well as consumers, say sources.

Earlier, in an inquiry report submitted to the Supreme Court, NAB found irregularities, like increase in gas theft and leakage ceiling and issuance of unauthorised compressed natural gas (CNG) station licences, due to decisions taken after the ‘controversial’ appointment of former Ogra chairman Tauqir Sadiq.

“In the first phase, NAB has completed initial investigation. Now in the second phase, it has started a formal probe to fix responsibility on officials involved in irregularities,” a source said, adding NAB officials had been recording statements of Ogra officials for the last few days.

According to the report submitted in the Supreme Court, serious irregularities had been found in the appointment of former Ogra chairman, which caused a loss of over Rs52 billion to consumers due to increase in the ceiling for unaccounted-for-gas (UFG) for gas distribution companies and unauthorised grant of CNG station licences despite a ban.

NAB conducted the probe on the directives of Supreme Court, which struck down the appointment of Tauqir Sadiq as Ogra chairman on November 25, 2011. NAB was of the view that professional experience claimed by Sadiq was false and rules were not followed in his appointment.

During his tenure, Sadiq along with other members raised the ceiling for UFG – gas theft and leakage – from 5% to 7%, which allowed gas utilities to collect an additional Rs36 billion from consumers with an increase in tariffs. Stock market brokers also took benefit of this and pocketed billions of rupees following a rise in share prices of gas companies after Ogra revised the ceiling upwards.

NAB believed that the brokers had prior knowledge of the increase in UFG level and they made billions when share prices of gas companies went up to Rs36 from Rs16 in September 2010.

The UFG level, which serves as a base for determining gas prices for the two distribution companies, stood at 6.5% in 2003-04 and was later revised downwards to 6% for 2004-05, 2005-06 and 2006-07. However, Ogra later increased the benchmark to 7% in September 2010 while assessing revenue requirements of gas companies.

Ogra also allowed earnings from the metre manufacturing plant, late payment surcharge, royalty from Jamshoro Joint Venture Limited (JJVL) and sale of condensate to be treated as non-operating income for financial year 2009-10. NAB termed this exercise illegal, saying it caused a loss of billions of rupees to gas consumers.

NAB, in its report, also noted that the former Ogra chief and others misused their authority by allowing relocation of CNG stations despite a ban on new filling stations.

NAB was of the view that the former Ogra chief appointed about 50 officers, including his nephew, in the authority in violation of rules and policy matters.

Ogra also spent around Rs13 million on the appointment of lawyers, which were not part of the approved panel.

“No action has been taken yet against responsible officials,” a government official said, adding action would be initiated after NAB completed a detailed investigation.

Published in The Express Tribune, March 25^th, 2012.