PPL violates policy and pays Rs72m in donations, sponsorships
Auditors made observation in audit report for 2010-11.
ISLAMABAD:
Pakistan Petroleum Limited (PPL), a state-owned oil and gas explorer, is found to be involved in irregularities worth millions of rupees in paying donations and sponsoring charitable, educational and sports organisations in violation of government’s policy.
In a report, the Auditor General of Pakistan observed that PPL made irregular payments of Rs72.72 million in donation and sponsorship to different organisations in 2010-11.
According to the corporate donation and sponsorship policy announced by the Finance Division, the paying organisation is required to ensure that “provision of the amount of donation exists in the annual budget”.
The organisation should ensure that the purpose of donation is consistent with its objectives and operations and has relationship with business activities of the organisations concerned or adds directly to promotion of their business. The policy further states that donations are subject to availability of budget and thus are not unlimited.
The audit report said the PPL management made payments of Rs68.814 million as donation to 18 organisations and Rs3.906 million in sponsorship to 24 organisations in 2010-11, in defiance of government instructions.
Furthermore, no provisions for such expenditures existed in the company’s budget for the year, which was clearly against government instructions as well as PPL’s own policy of donation and sponsorship.
Auditors pointed out that the main function of PPL is exploration and production to enhance its hydrocarbon reserves, aimed at bridging the increasing energy deficit and securing long-term growth.
Being a government-owned organisation with a 71% stake, it has exclusive rights to exploration and production business and has limited business competitors. The purpose of donations and sponsorships was not consistent with the objectives and operations of the company, the auditors said.
The matter was brought to the notice of PPL management on February 15 this year through preliminary observation. In its reply on February 22 and 24, the management said PPL, being an exploration and production company, did not fall in the category of development finance institutions (DFIs) and therefore the framework did not apply to it.
However, the auditors said “the reply is not tenable as the Finance Division (Regulations Wing-11) has issued the directive for autonomous and semi-autonomous bodies and that is equally applicable to PPL.”
The auditors concluded that donation and sponsorship could not be a management initiative to acquire business and were against PPL’s policy. Therefore, “it is irregular and unjustified.”
Published in The Express Tribune, May 19th, 2012.
Pakistan Petroleum Limited (PPL), a state-owned oil and gas explorer, is found to be involved in irregularities worth millions of rupees in paying donations and sponsoring charitable, educational and sports organisations in violation of government’s policy.
In a report, the Auditor General of Pakistan observed that PPL made irregular payments of Rs72.72 million in donation and sponsorship to different organisations in 2010-11.
According to the corporate donation and sponsorship policy announced by the Finance Division, the paying organisation is required to ensure that “provision of the amount of donation exists in the annual budget”.
The organisation should ensure that the purpose of donation is consistent with its objectives and operations and has relationship with business activities of the organisations concerned or adds directly to promotion of their business. The policy further states that donations are subject to availability of budget and thus are not unlimited.
The audit report said the PPL management made payments of Rs68.814 million as donation to 18 organisations and Rs3.906 million in sponsorship to 24 organisations in 2010-11, in defiance of government instructions.
Furthermore, no provisions for such expenditures existed in the company’s budget for the year, which was clearly against government instructions as well as PPL’s own policy of donation and sponsorship.
Auditors pointed out that the main function of PPL is exploration and production to enhance its hydrocarbon reserves, aimed at bridging the increasing energy deficit and securing long-term growth.
Being a government-owned organisation with a 71% stake, it has exclusive rights to exploration and production business and has limited business competitors. The purpose of donations and sponsorships was not consistent with the objectives and operations of the company, the auditors said.
The matter was brought to the notice of PPL management on February 15 this year through preliminary observation. In its reply on February 22 and 24, the management said PPL, being an exploration and production company, did not fall in the category of development finance institutions (DFIs) and therefore the framework did not apply to it.
However, the auditors said “the reply is not tenable as the Finance Division (Regulations Wing-11) has issued the directive for autonomous and semi-autonomous bodies and that is equally applicable to PPL.”
The auditors concluded that donation and sponsorship could not be a management initiative to acquire business and were against PPL’s policy. Therefore, “it is irregular and unjustified.”
Published in The Express Tribune, May 19th, 2012.