Auditor general reveals: Rs15b fraud unearthed in oil subsidy payments

Ministry reluctant to provide records to help auditors.

ISLAMABAD:

Auditor General of Pakistan (AGP) Akhtar Buland Rana has revealed that a colossal fraud worth Rs15 billion has been unearthed in payments of Rs317 billion oil subsidies, highlighting yet another scandal in a sector that is believed to be run by a nexus of oil lobbies and corrupt officials.

In a Public Accounts Committee (PAC) meeting on Tuesday, AGP Rana said the fraud was committed while making payments on account of price differential claims.

He added that despite repeated attempts, the ministry of petroleum and natural resources was reluctant to provide relevant records and using delaying tactics to continue sweeping the issue under the carpet.

Due to obstructions created by the ministry, it took auditors eight months to complete the audit - a job that could have been done in a month’s time had the ministry cooperated, AGP Rana stated.

He said the audit conducted on the Rs317 billion worth of subsidies has framed 30 observations.

However, the observations have not yet been compiled in the form of an audit report. “It is a colossal amount which will remain under observation till such time the record is produced,” he said.

Expressing his disappointment over the slow pace of settling audit objections in the PAC, the auditor general said his department had decided to exercise extraordinary powers to expose glaring cases of corruption in various government departments aimed at taking swift action.



The oil and gas sector is believed to be operated under a nexus of ministry officials and the representatives of oil marketing companies, allegedly to fleece both the government and consumers.

Petroleum Secretary Dr Waqar Masood complained that AGP Rana was unilaterally taking action, while ignoring his input. But the PAC did not accept his stance and instructed Dr Masood to facilitate the audit by providing all relevant records.

The PAC also sought a written reply from the ministry of petroleum and natural resources before it could pass a judgment on the alleged fraudulent payments of Rs15 billion.

Rs17.2b irregular payments during PPP, PML-N tenures

In yet another case, auditors told the PAC that Rs17.2 billion worth of irregular payments were made to three oil refineries during the second tenures of the Pakistan Peoples Party and Pakistan Muslim League-Nawaz. The practice was also conducted for the early three years of General (retd) Pervez Musharraf’s rule.



However, the director general Audit, Customs and Petroleum told the meeting that on the directions of the PAC, auditors again conducted a sample audit and it observed Rs1.56 billion worth of irregular payments in only one year.

At that time, the governments had assured a guaranteed minimum profit margin of 10%, while capping it at the maximum limit of 40%. However, various incomes were marked as expenditures to show profits of below 10%. Thus the petroleum ministry paid Rs17.2 billion of taxpayer money to the refineries.

According to auditors, the payments were made to Pakistan Refinery Limited, National Refinery Limited and Attock Refinery Limited.

It was revealed that two refineries were earning profits above the 40% mark and did not deposit the excess amount of Rs389.2 million in the national kitty, as per the decision of the Economic Coordination Committee of the Cabinet in April 1993. PAC Chairman Nadeem Afzal Chan directed Dr Masood to settle the issue in the next 10 days.

Read: (Catching the fish — small and big — in Pakistan)

Published in The Express Tribune, January 9^th, 2013.