ISLAMABAD: The Auditor General of Pakistan (AGP) has raised serious concerns about the performance of the Director General (Petroleum Concession) (DGPC), the regulatory body overseeing oil and gas exploration companies in Audit Report 2023-24.
The AGP highlighted the DGPC’s non-compliance with audit directives and its failure to effectively manage revenue streams. The DGPC is responsible for collecting royalties on crude oil and natural gas, rent for lease and license areas, marine research fees, and production bonuses.
However, the AGP’s audit for the financial year 2022-23 revealed a significant compliance gap. According to the audit report, the DGPC’s compliance rate for directives issued over the past 21 years (2000-01 to 2021-22) was only 31 percent. Out of a total of 356 directives, the Petroleum Division complied with only 112, while 244 directives remain pending compliance.
The AGP’s criticism underscores the need for immediate action to improve the efficiency and performance of the DGPC. The regulator’s failure to comply with audit directives raises questions about its ability to effectively regulate the oil and gas industry and protect the country’s financial interests.
Fifteen cases worth of Rs392.2 billion have been dealing with DG (PC) out of total 34 audit cases pertaining to Petroleum Division. These are non-realisation of royalty on natural gas/crude oil of Rs28 billion; training fund, social welfare obligation and license and lease rent (non-utilisation of training fund – Rs3 billion); non-realisation of production bonus of Rs2.1 billion; non/short realisation of training fund of Rs426 million; short realisation of social welfare obligation of Rs376 million; non-realisation of licence and lease rent from E&P companies of Rs53 million; irregular operation of E&P leases due to non-renewal by DG (PC) of Rs326 billion; non-recovery of 15 percent wellhead price due to non-renewal of leases of Rs21 billion; revival of exploration licenses without obtaining performance guarantee of Rs10 billion; non-monetisation of discoveries into production of Rs2.8 billion; un-authorised grant of marginal price incentives of Rs4 billion; non-taking over unauthorised shifting of installation and facilities of depleted fields of Rs3 billion; irregular retention of funds generated from sale of data in commercial bank account and non-utilisation thereof Rs624 million; inadmissible claim of expenditure against royalty processing charges of Rs290 million and non-provision of financial information in concession management system by E&P companies.
Copyright Business Recorder, 2024
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