Petroleum ministry unable to recover Rs7.5b dues from Byco

AAG Rehman has sought one month’s time from apex court to resolve the matter

ISLAMABAD: Despite the passage of five years, the Ministry of Petroleum has been unable to recover a hefty HSD price differential claim of approximately Rs7.5 billion from Byco Petroleum Pakistan Ltd.

It is learnt that the Attorney General for Pakistan (AGP) Office has conveyed its concerns over the matter to the ministry. Last week, AGP Anwar Mansoor Khan met with Minister for Power and Petroleum Omar Ayub and apprised him of the details as to how the Ministry of Petroleum was delaying the matter of recovery of Rs7.5 billion ‘HSD price differential claim’ from the petroleum company. The apex court has also shown its concern over the negligence of the ministry in this matter last week.

Case facts

The issue started when the Economic Coordination Committee (ECC) on February 22, 2013 allowed benefit of Inland Freight Equalisation Margin (IFEM) in terms of operational costs of single point mooring (SPM) to Byco Company. However, the Oil and Gas Regulatory Authority (OGRA) on April 4, 2016 considered the matter related to the recovery of SMP operational cost claim from Byco.

The OGRA; however, recommended the ECC to reconsider its decision due to several reasons. The authority also ordered to defer the reimbursement of operational cost of SPM to the company till the ECC decision.

Further, OGRA directed Byco to pay HSD price differential claim which is public money and company has already collected from consumers. In view of the OGRA decision, the Ministry of Petroleum on April 16, 2014 directed Byco to pay the HSD price differential.

However, Byco challenged OGRA’s April 4, 2014 decision. The Sindh High Court considering the OGRA decision on September 7, 2016 dismissed Byco petition against OGRA decision regarding the reconsideration of the matter by the ECC. Later, the petroleum company challenged the SHC order in the apex court, which is still pending.

After dismissal of Byco petition by the SHC, the Ministry of Petroleum on September 22, 2016 claimed HSD price differential, which at that time was approximately Rs2.5 billion but now the claim is approximately Rs7.5 billion.

Upon this, Byco again approached the SHC challenging the recovery of HSD price differential till decision on the petroleum company’s claim of operational cost. Upon this, the SHC on September 3, 2016 granted stay on the recovery.

A senior official revealed to The Express Tribune that despite the passage of three years, the officials in the Ministry of Petroleum did not forward the summary to the ECC for reconsideration of its decision in view of OGRA’s April 4, 2016 recommendations.

It is learnt that AGP Khan briefed the power minister, who was also surprised as to how the ministry could not forward the summary to the ECC for the last three years.

A senior official believed that the government should form a committee to probe the alleged connivance about the delay in the recovery of the hefty amount. He said, “There is no dispute about the outstanding amount of Rs7.5 billion. However, Byco is delaying the payment due to non-settlement of 'operational costs of SMP' by the ECC on the advice of OGRA since 2016.”

Last week, a two-judge bench comprising Justice Mushir Alam and Justice Qazi Muhammad Amin also expressed concerns over the delay in the recovery of Rs7.5 billion from Byco.

Additional Attorney General Amir Rehman, appearing before the bench, sought one month’s time to resolve the matter.