KARACHI: “Despite holding the largest exploration area and largest recoverable hydrocarbon reserves, the exploration activities and operational performance of the Oil and Gas Development Company Limited (OGDCL) remained unsatisfactory,” said an audit report on accounts of public sector enterprises for 2013-14.

It further said the OGDCL did not maintain or continue its aggressive exploration programme and strategies of exploiting exploration opportunities in subsequent years.

Despite having latest data acquisition technologies equipped with on-site data facilities and latest quality control software, it failed to hit its targets.

During 2008-09, the company spudded 30 wells against the target of 32 and thus 94 per cent of the target was achieved. However, in subsequent years other than 2012-13, the performance of the company remained unsatisfactory.

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In 2009-10, the target was 42 wells and it spudded 26 wells, in 2010-11, the target was 41 and it spudded 21 wells, in 2011-12 the target was 27 and it spudded 17 wells, and in 2012-13, the target was 27 wells, and it spudded 24.

The report identified a number of irregularities in the company and said that the size of spares in stores has been rising each year running into billions of rupees.

Stores and spares increased from Rs13.89 billion in 2010-11 to Rs16.63bn in 2012-13. Resultantly the provision for slow moving and obsolete stores increased from Rs1.55bn in 2010-11 to Rs2.16bn in 2012-13, said the report.

“The increasing trend in the provision of slow moving or obsolete stores and spares indicated that the same were procured in excess of actual requirements. Matter needs justification,” said the report.

The company failed to realise interest accrued which rose to Rs10bn from half a billion a year ago. The report said the company is not taking timely action for realisation of interest as interest accrued increased by 1801pc to Rs10.125bn in 2012-13 from Rs532m in 2011-12 (2010-11 Rs324m).

“Unpaid dividend increased from Rs0.29bn in 2011-2012 to Rs2.47bn in 2012-13. Reasons need to be investigated,” said the report.

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The company made an expenditure of Rs129.9m (2012-Rs152m) on account of advertising. This expense seems very high in respect of a government owned company and needs investigation, report said.

The report also identified the huge loss of over Rs11bn due to non-recovery of late payment surcharge.

According to the report, the company supplied crude oil from fields (wells) to four oil companies during 2006-07 to 2011-12 but the buyers did not pay the cost of oil on due dates, as such OGDCL charged late payment surcharge (LPS) for delay in payments of invoices.

“The management could not recover Rs11.82bn of LPS till June 30, 2012 from refineries.”

The auditors were not satisfied with the reply to defend the huge loss and said the reply was not convincing.

The report identified over Rs1bn loss due to sale of LPG without obtaining signature bonus. The company sold LPG 5 tonne lots from Bobi Oil Complex, 26 lots from Kunnar and 10 lots from Adhi Oil-fields without signature bonus during August 2007 to December 2012.

Resultantly, the company sustained a loss of Rs1.216bn on sale of these lots.

The supply of off-specification gas caused a loss of Rs542m to the OGDCL, the report said.

The report pointed towards purchase of material worth Rs45.5m in a non-transparent manner without obtaining competitive rates.

The report also identified procurement of faulty and other than approved specification cranes worth Rs158 million. Three cranes with spares were procured from Dubai in 2007. The seller provided 20 to 30 tonnes cranes instead of 55 tonnes while their performance was extremely poor and had various electrical and mechanical problems.

Published in Dawn, July 10th , 2014