PPL makes ‘unauthorised’ investment of Rs31b
Company argues its board has full powers to make rules of operations.
ISLAMABAD:
The Auditor General of Pakistan (AGP) has unearthed that state-owned oil and gas explorer Pakistan Petroleum Limited (PPL) invested an amount of Rs30.92 billion in various bank deposits, term finance certificates (TFCs), Pakistan Investment Bonds (PIBs) and mutual funds without getting the approval of the Finance Division.
According to the policy guidelines of the Finance Division, released on July 2, 2003, dealing with deposits of working balances and investment of surplus funds belonging to public sector enterprises and local/autonomous bodies, working balance limit of each organisation is to be determined with the approval of the administrative ministry in consultation with the Finance Division.
According to an audit report, during the review of PPL records for the year 2010-11, auditors observed that the management of PPL invested funds worth Rs30.925 billion as of July 23, 2010 in various bank deposits, TFCs, PIBs and a nominal amount in mutual funds.
“Audit was of the view that the management should ensure complete compliance with the investment procedural requirement laid down in the subject policy circulated under the Finance Division,” the report said.
The auditors sought records pertaining to determination of working balances for 2010-11 and approval of competent forum in terms of guidelines issued by the Finance Division.
The PPL management, in a letter issued on December 27, 2011, stated that after approval of the board of directors, the company kept liquid funds against insurance of Rs19 billion and asset acquisition reserve of Rs25 billion. It said the company required substantial amounts to be spent on exploration in new blocks.
The management, in other replies dated February 7 and 24, 2012 told the auditors that the company’s operational activities varied from month to month based on the work programme for each period.
The working capital balance at any point of time ranges between Rs2 and Rs3 billion and fluctuates extensively based on exploration commitments and the operating and development programme.
“Therefore, it may not be possible to classify the company’s funds between the working balance required for operation and surplus funds. Furthermore, according to the Finance Division expenditure wing, PPL’s board has full powers under the companies ordinance to make own rules for operations,” the company management stressed.
Published in The Express Tribune, May 6th, 2012.
The Auditor General of Pakistan (AGP) has unearthed that state-owned oil and gas explorer Pakistan Petroleum Limited (PPL) invested an amount of Rs30.92 billion in various bank deposits, term finance certificates (TFCs), Pakistan Investment Bonds (PIBs) and mutual funds without getting the approval of the Finance Division.
According to the policy guidelines of the Finance Division, released on July 2, 2003, dealing with deposits of working balances and investment of surplus funds belonging to public sector enterprises and local/autonomous bodies, working balance limit of each organisation is to be determined with the approval of the administrative ministry in consultation with the Finance Division.
According to an audit report, during the review of PPL records for the year 2010-11, auditors observed that the management of PPL invested funds worth Rs30.925 billion as of July 23, 2010 in various bank deposits, TFCs, PIBs and a nominal amount in mutual funds.
“Audit was of the view that the management should ensure complete compliance with the investment procedural requirement laid down in the subject policy circulated under the Finance Division,” the report said.
The auditors sought records pertaining to determination of working balances for 2010-11 and approval of competent forum in terms of guidelines issued by the Finance Division.
The PPL management, in a letter issued on December 27, 2011, stated that after approval of the board of directors, the company kept liquid funds against insurance of Rs19 billion and asset acquisition reserve of Rs25 billion. It said the company required substantial amounts to be spent on exploration in new blocks.
The management, in other replies dated February 7 and 24, 2012 told the auditors that the company’s operational activities varied from month to month based on the work programme for each period.
The working capital balance at any point of time ranges between Rs2 and Rs3 billion and fluctuates extensively based on exploration commitments and the operating and development programme.
“Therefore, it may not be possible to classify the company’s funds between the working balance required for operation and surplus funds. Furthermore, according to the Finance Division expenditure wing, PPL’s board has full powers under the companies ordinance to make own rules for operations,” the company management stressed.
Published in The Express Tribune, May 6th, 2012.