Audit report: SSGC suffers Rs36b loss due to corruption, non-recovery

Managing director says all contracts awarded after board’s approval.


Zafar Bhutta February 06, 2012

ISLAMABAD:


The Auditor General of Pakistan (AGP) has detected 22 cases of fraud, embezzlement, gas theft, irregular appointments and non-recovery of funds, causing a loss of Rs36 billion to Sui Southern Gas Company (SSGC).


As a result, the AGP has recommended initiating an inquiry into the conduct of officials in award of contracts, irregular payments and gas theft.

The latest audit of SSGC’s accounts, conducted in the first half of current fiscal year 2011-12, reveals that the company faced a loss due to non-recovery of Rs29.8 billion in trade debts from the Karachi Electric Supply Company (KESC) and Rs2.116 billion from other debtors.

According to the audit report, the SSGC management was also involved in a Rs4.2 billion scam on account of fraud, misappropriation of funds, violation of rules and regulations.

The AGP found irregularities in award of contracts worth Rs2.7 billion and asked the company management to refer these cases to the National Accountability Bureau (NAB). It also noted that former managing director of the company received an irregular payment of Rs1.725 million in the shape of bonus.

The AGP questioned the award of a contract worth Rs555.13 million for procurement of mild-steel pipeline for Kunnar-Pasakhi gas field development project. In this case, the SSGC management allowed local suppliers only and excluded international bidders from the bidding process in violation of Public Procurement Regulatory Authority (PPRA) rules.

According to the report, the SSGC faced a loss of Rs238.001 million after surveillance and monitoring and billing departments failed to check theft of gas and control direct use of gas (without any meter reading) by consumers. In Karachi, Hyderabad, Sukkur and Quetta, the company suffered a loss of Rs86.8 million on account of gas theft and direct use of gas connections.

The billing department also caused a loss of Rs151.201 million due to short billing. The company bore a burden of Rs261 million equal to loss of 820 million cubic feet of gas per day (mmcfd) from August to November 2010. In this case, the auditors questioned why gas supply was not disconnected.

The auditors also pointed out loss of Rs16.86 million due to irregular award of a contract to Interman Trading LLC Dubai, loss of Rs17.206 million in irregular award of contract to Matflex Precision Mouldings Limited, irregular award of contract valuing Rs404.84 million, loss of Rs2.35 million due to non-deduction of liquidated damages, substandard shipment of Horizontal Filtre Separators, loss of Rs6.388 million due to irregular procurement of odorant oil from the second lowest bidder, irregular payment of fee to advocates and counsel worth Rs43.6 million and non-disposal of obsolete stores and scrap valuing Rs95.25 million.

Commenting on the audit report, SSGC Managing Director Azeem Iqbal Siddiqui said the company received the report a week ago, adding the board of directors had approved bonus for former MD Dr Faizullah Abbasi.

“We are preparing replies to the observations made by the auditors that will be submitted to the Departmental Accounts Committee,” he said, adding all contracts were awarded after approval of the board of directors.

Siddiqui said the company purchased the pipeline for Kunnar-Pasakhi project following approval of the committees concerned as well as the board of directors. However, he confirmed that the AGP had asked the company to submit cases related to contracts worth Rs2.7 billion to NAB for investigation.

Defending uninterrupted supply of gas to KESC, from which SSGC failed to recover trade debts of Rs29 billion, Siddiqui asked “how is it possible to stop supply to KESC that is providing electricity to Karachi consumers.”

Published in The Express Tribune, February 7th, 2012.

COMMENTS (4)

Zulfiqar Ali Syed | 9 years ago | Reply

it is not a doing of one person. There are number of people involve in corruption, and it is a time that a through review of SSGC is conducted.

Parvez | 9 years ago | Reply

A highly profitable and well managed company has been brought to this level thanks to the policies of one man and his political party. Is there no one capable of stopping this madness ???

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