Conflict of interest: Auditors term OGRA chairperson’s hiring illegal

Auditor General of Pakistan says appointment of the regulator’s head violates ordinance

Zafar Bhutta December 19, 2018
Auditors found that the final revenue requirement of SNGPL for 2015-16 and estimated revenue requirement for 2016-17 were decided in favour of the company. PHOTO: REUTERS

ISLAMABAD: The Auditor General of Pakistan (AGP) has termed the appointment of Oil and Gas Regulatory Authority (Ogra) chairperson illegal, a decision which may cause trouble for the Pakistan Muslim League-Nawaz (PML-N), which had been in power from 2013-18.

The apex court has already taken notice of appointment of the managing director of Pakistan State Oil (PSO). Now, the AGP remarks about Ogra chairperson’s hiring may deal another blow to the PML-N as the National Accountability Bureau (NAB) may initiate investigation into the matter.

Auditors noted that the appointment of Ogra Chairperson Uzma Adil violated the Ogra Ordinance 2002 and recommended that the matter should be probed.

They found that Adil had been looking after the interest of Sui Northern Gas Pipelines Limited (SNGPL), being its former employee, and had given undue favour while approving the company’s revenue requirement of billions of rupees.

According to clause 5(2) of the Ogra ordinance, no person shall be appointed member or he or she has any direct or indirect financial interest or any connection which might reasonably be viewed as giving rise to conflict of interest with any person involved in the regulated activity.

During the audit for fiscal year 2016-17, it was noted that the federal government appointed Adil as Ogra chairperson in July 2016 at a salary of Rs500,000 per month. The chairperson, before joining Ogra, had served almost her entire carrier in SNGPL on positions of company chief, GM, secretary, CFO, DMD and MD.

The auditors pointed out that she was allowed to come over from SNGPL to Ogra without any gap. Ogra is SNGPL’s regulator.

Being the MD and CFO, she had recommended final revenue requirement and given proposals pertaining to unaccounted-for-gas (UFG) loss to Ogra. The same subjects came within her jurisdiction at Ogra for review. The auditors found that the final revenue requirement of SNGPL for 2015-16 and estimated revenue requirement for 2016-17 were decided in favour of the company by the chairperson.

Similarly, the focus of Ogra in previous years was on controlling SNGPL’s operating expenses, which was toned down in subsequent determinations. The auditors were of the view that the matter needed to be reviewed at the government level and clarification should also be sought from the Ministry of Law and Justice.

Luxury vehicles

The AGP also noted that Ogra had spent Rs14.22 million on the illegal purchase of luxury vehicles and recommended that responsibility should be fixed on the officials involved in the matter.

The auditors pointed out that according to an office memorandum of the Finance Division expenditure wing, dated July 28, 2015, regarding austerity measures, there would be a complete ban on the purchase of all types of vehicles both for current as well as development expenditure.

During the audit for fiscal year 2016-17, it was observed that Ogra management purchased various types of luxury vehicles valuing Rs14.22 million during the year for its head office in violation of the policy.

The auditors pointed out that the matter was reported to the Ogra management and ministry on October 11, 2017. The Departmental Account Committee (DAC), in its meeting held on February 1, 2018, did not agree with contention of the management that the relevant notification was not applicable to it.

The DAC directed Ogra to get ex-post facto approval and relaxation from the Finance Division immediately. The auditors recommended compliance with the DAC directive besides fixing responsibility.

Published in The Express Tribune, December 19th, 2018.

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