ISLAMABAD: The late payment surcharge (LPS) of the Oil and Gas Development Company (OGDCL) against oil refineries and gas distributors has reached Rs57 billion while OGDCL’s recoveries only increased marginally due to unsettled issues related to circular debt.

A sub-committee of the Public Accounts Committee (PAC) on Wednesday was informed that the amount received by OGDCL showed some improvement but they are still far away from any settlement until the government resolves circular debt issues.

OGDCL Managing Director Zahid Mir informed the committee that the company allocated gas and oil to those companies and refineries designated by the government. He said these gas and oil companies were unable to clear their payment in time due to circular debt.

He further said that the company did not get even a single penny under the LPS head despite the amount climbing up to Rs57bn.

Responding to audit officials’ observation, the OGDCL chief said that the financial system of the company cannot be straightened until issues regarding circular debt are resolved.

He further said that exploration activities in no-go areas in KP and Balochistan increased manifold after restoration of law and order over there, adding that OGDCL has added 12 more petroleum concessions to its profile in Balochistan over the last two years.

Mr Mir further said that the company has flat production of oil and gas as it has failed to make any big discovery.

Productions in old rigs have depreciated by 8 to 10 percent. Currently, OGDCL owns eight rigs, has a partnership in 18 rigs and has been acquiring rigs on lease to minimize liabilities, he said.

Director General Petroleum Concessions revealed that gas and oil exploration in 2015-16 had exceeded the target.

He said the Ministry of Petroleum and Natural Resources targeted 84 wells but surpassed the target and grilled 88 wells. He said the success ratio of wells was also more than 33pc.

Published in Dawn, July 28th, 2016