ISLAMABAD, March 5: The Public Accounts Committee (PAC) of the National Assembly has directed the Ministry of Petroleum to mount a probe to unearth the ‘racket’ of certain oil companies minting millions of rupees in the name of inland freight margins.
The committee directed the Petroleum Ministry to investigate the refund of Rs897.65 million as inland freight margin to the Attock Oil Refinery Ltd (ARL).
Chaired by Malik Allahyar Khan, the committee met here at the Parliament House to discuss the observations of the audit department on the Ministry of Petroleum and Natural Resources for the financial year 2000-01.
Members of the committee pointed out that the refund sanctioned by the ministry was inconsistent with the rules and it was admissible to oil companies not oil refineries.
They said millions of rupees of inland freight margins were siphoned off by oil companies despite the fact that they never supplied oil to far-off areas like Chilas and Azad Kashmir and sold it in the nearby areas of Taxila, Attock, etc.
The committee asked the managing director, Pakistan State Oil (PSO), Jalees Siddiqui to provide records of oil trucks sent to Chilas, number of people living there and the total population of the area.
The committee expressed concerns over the declaration of less profit by oil refineries during 1999 to 2001 and taking undue refund of more than Rs150million.
The PAC was told that the Economic Coordination Committee (ECC) of the Cabinet had approved a new policy to grant concession to the oil refineries in 1993 under which they could take payment from the government if they earned less than 10 per cent profit. While, in case of more than 40 per cent profit they were required to make payment to the government.
However, the oil refineries declared less than 10 per cent profit by deducting the income earned from the non-refining sector from the total income and thus they realized more than Rs150million from the government which was unfair.
The Ministry of Petroleum said it had permitted the oil refineries to deduct the non-refining income from the total income.
The PAC formed a special committee comprising representatives of ministries of petroleum, finance and the auditor general of Pakistan to probe the issue and file a report.
The committee was informed that the 10 to 40 per cent profit formula, the government made payment of $11.5 billion to the oil refineries, whereas the oil refineries made payment of $3.3billion during the period 1993-2002. Which meant the government paid $8.2billion.
About an audit objection related to non-realization of Gas Development Surcharge (GDS) plus interest, the Secretary Petroleum Ahmed Waqar said the Economic Coordination Committee (ECC) of the Cabinet had decided to write off the interest on GDS. The Audit was of the opinion that the ECC was not the competent forum to do so, that is why it deferred the matter till the next meeting and refused to settle it.
Auditor General Younis Khan informed the committee that the government was planning to amend the law to settle the issue.
