Audit Uncovers Rs. 2.05 Trillion Irregularities in Oil and Gas Sector

The Auditor General’s report has revealed serious financial and operational irregularities exceeding Rs. 2.05 trillion in Pakistan’s Oil and Gas sector, citing unresolved circular debt, mismanagement of funds, and project delays. According to the report, Rs. 1.43 trillion in inter-corporate circular debt remains unsettled, while Rs. 350 billion collected under the Gas Infrastructure Development Cess (GIDC) was not used for transnational pipeline projects. The government also failed to recover Rs. 69 billion from Sui gas companies. Operational lapses highlighted include the diversion of RLNG to the domestic sector by Sui Northern, causing losses of up to Rs. 53 billion due to violations in winter load management, and a Rs. 44 billion loss from delays in installing gas compression equipment. OGDCL’s failure to curb expenses in unprofitable fields cut profits by Rs. 32.6 billion, while Rs. 28 billion in royalties from exploration companies remained uncollected. The report noted poor technical bid evaluations, with contracts worth Rs. 15.28 billion awarded to inexperienced bidders, and a Rs. 14.63 billion petroleum levy not collected from a refinery, costs that were passed on to consumers. Additional findings include unnecessary capital expenditure of Rs. 10.45 billion on pipeline projects, a Rs. 9 billion cost increase due to delays in gas recovery pipelines, and incomplete gas development schemes worth Rs. 7.49 billion. Failures in oil production increases led to losses of Rs. 2.3 billion, while PSO and Sui Northern withheld Rs. 1.5 billion in dividends, and OGDCL did not receive Rs. 847 million from joint venture partners. The Auditor General recommended immediate steps to resolve circular debt, accelerate pipeline projects, and address delays in key petroleum sector initiatives.