ISLAMABAD, Oct 30: The government has made more than Rs255 billion under the pretext of maintaining uniform oil prices across the country, reveals an audit report. The Auditor-General of Pakistan, which unearthed an unauthorised credit of Rs255.313 billion to the federal consolidated fund, has failed in its efforts over five years to get a satisfactory justification from the ministries of finance and petroleum over the issue.

The AGP also ordered recovery of Rs11.4 billion paid by the petroleum ministry to the refineries in violation and misuse of decisions of the Economic Coordination Committee (ECC) of the cabinet.

It worked out another Rs1 billion misappropriation on account of irregular profit shortfalls, inaccurate price calculations and inland freight margin payments to the refineries and oil companies.

Finally, it gave up to the delaying tactics of the two ministries, agreed to allow regularisation of the misuse of public funds and reported the case to the Public Accounts Committee (PAC).

The PAC invited principal accounting officer of the petroleum ministry to explain the anomalies on Oct 17 but he did not attend the meeting, although he was in his Islamabad office. The PAC took strong notice of this and decided to take up the matter again shortly.

Senior officials of the petroleum ministry were not available for comments.

The subject study on refund of development surcharge on petroleum products, said the PDS under the law represented differential between production cost and the fixed sale price of refineries or between the average import price and the prescribed sale price of oil marketing companies.

The surcharge was meant for meeting refund claims subsequently on account of price differential and inland freight equalisation margin.

In contravention of the objectives of the petroleum surcharge Rs255 billion was credited to the federal consolidated fund during 1988-9 to 2000-1 whereas it was primarily meant for the specific purpose, said the AGP.

The AGP had asked the two ministries to furnish authority under which development surcharge fund was transferred to the federal consolidated fund and intimate volume of liability on account of pending reform as on June 30, 2001. In reply, the director-general, oil, of the petroleum ministry said the finance division had been requested on May 7, 2002; Oct 17, 2002; Aug 12, 2003; Feb 17, 2004; and July 23, 2004, for furnishing comments on the matter. Their reply is still awaited.

On the question of unwarranted refund on account of profit shortfall of Rs11.4 billion to the refineries, the AGP said the law did not allow prescribed price of local products to exceed price of imported products. A decision of the ECC of April 1993 put all refineries on import parity formula which in addition to price differential and their return on the paid up capital was limited from 10 to 40 per cent.

Taking advantage of the decisions, the refineries showed their return less than 10 per cent and lodged refund claims on account of profit shortfall which was not admissible to them.

The audit was of the view that adequate compensation in the shape of price differential claim was available to the refineries to save them from any loss. There was no specific order to grant refund if the profit of a refinery remained less than 10 per cent during a year. Furthermore, the law did not cover such a guaranteed profit.

The ministry of petroleum took the position that refineries were given guaranteed rate of return in the range of 10-40 per cent under the ECC decision but the audit did not agree to the logic that the ECC decision covered all refineries.