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NAB probe confirms Ogra malpractices

June 11, 2012


According to one estimate, gas consumers suffered a whopping Rs70 billion loss over three years thanks to a single decision of Ogra to hike the prices in violation of rules. - File photo

ISLAMABAD: The National Accountability Bureau (NAB) has informed the Supreme Court about colossal losses that have been caused to the public exchequer and the general public because of gas pricing, theft and setting up of illegal CNG stations allowed by the Oil and Gas Regulatory Authority (Ogra).

In a progress report submitted to the court, NAB said that an arrested member of Ogra, Mansoor Muzaffar Ali, had “made serious revelations, particularly concerning pricing mechanism of Dewan Petroleum, raising of unaccounted-for gas (gas losses) benchmark, injunctions passed in gas theft cases and connivance of other Ogra executives and private persons”.

The report said that the former chairman of Ogra, Tauqir Sadiq, had been absconding since May 16 and the process for freezing of known assets of his and other accused and ‘benamidars’ was under way for the recovery of the money. “So far, 40 bank accounts of the accused persons have been placed under caution. Simultaneously, a reference under National Accountability Ordinance 1999 is also under preparation.”

The NAB report said that arrest warrants for Mr Sadiq had been forwarded to the inspectors general of police in Islamabad and Punjab.

It said the investigation was in final stages and preparations for the draft of a reference under the NAB Ordinance and arrest of other accused in seven related cases were under process.

The cases pertain to the appointment of former Ogra chairman, non-compliance of directives regarding restoration of the powers of member (gas) assigned to the member (finance) and illegal relocation of sites despite a government ban on new CNG stations.

The report said 47 cases had been established about illegal relocation and recording of statements of the stations’ owners was under way.Other cases pertain to illegal extension of provisional licences, unnecessary delays and adjournment in appeals and award of illegal injunctions in gas theft cases. Licences of 11 CNG stations granted by the former chairman have been found issued on fake documents.

NAB said the allegation against the former chairman in this case had been established and relevant documents had been procured. The financial impact of decisions taken by the former Ogra chief amounted to a substantial loss to people and the exchequer. This happened because the operating income of the SSGCL and SNGPL was changed to non-operating income.

According to the report, the increase in gas loss benchmarks from 5 to 7 per cent for the two gas companies caused a loss of billions of rupees.

According to one estimate, gas consumers suffered a whopping Rs70 billion loss over three years thanks to a single decision of Ogra to hike the prices in violation of rules. The decision was leaked in advance, allowing powerful brokers to buy extra stocks of gas companies and make a killing.

Under the decision, Ogra made a departure from its own decisions and targets, and set losses at 7 per cent for 2009-10 instead of the previous benchmark of 5 per cent. As a result, there was a 13 per cent increase in gas tariff for that year, followed by another 15 per cent increase in August last year and about 14 per cent from Jan 1, 2011, putting the total estimated loss at over Rs70 billion.

Sources said the September 2010 decision to increase UFG to 7 per cent and to treat revenue from operating assets as non-operating income was shared by Ogra leaders with stock brokers sitting on the board of directors of the gas companies.

Consequently, the SSGCL share being traded at the stock exchange for Rs16 on Sept 23 jumped to Rs36 in a matter of days.

As the stock players earned over Rs10 billion, the then Ogra chairman tried to reverse the decision after an onslaught of public criticism but was vetoed by the member (gas) who is now in NAB’s custody.

The report said Ogra reduced the benchmark to 4.5 per cent in May but the SNGPL had gained stay orders from the court of Justice Mamoonur Rasheed of the Lahore High Court on a writ petition filed by lawyer Mirza Mahmood Ahmad on behalf of the company’s managing director. Interestingly, Mr Mahmood Ahmad is also a director of the Sui Southern Gas Company Ltd.

The report said the allegation about misuse of authority in the case of increase in the well-head price of Dewan Petroleum’s Salsabil field had been established, yet loss to the exchequer did not occur since disbursement of money never took place.

It said an allegation regarding illegal appointments, malpractices and corruption allegedly by Mr Sadiq in the appointment of about 50 officers had been established. Similarly, illegal payments of about Rs13 million to attorneys outside the approved panel and for personal cases of Mr Sadiq, illegal and unauthorised creation of posts in the chairman’s office and unlawful expenditure on new secretariat had also been established.