Use of faulty chemical in drilling caused Rs7.82b loss to nation: PAC told

Use of faulty chemical in drilling caused Rs7.82b loss to nation: PAC told

Islamabad: The department of auditor general of Pakistan revealed in the Public Accounts Committee (PAC) that the Oil and Gas Development Company Limited (OGDCL) caused a Rs7.82 billion loss to the national exchequer due to purchase of substandard and inferior quality chemical for drilling at Rig-site.

The committee directed the authorities to complete the inquiry and submit its report within 15-days. PAC hold its meeting Thursday with the chair of its Chairman Syed Khursheed shah in which audit paras relating to the Ministry of Energy with regard to OGDCL for the year 2016-17 were examined.

The audit officials told the committee that during the audit of OGDCL for the year 2016-17, it was observed that rate contract for hiring of Mud Engineering Services from M/s SCOMI Oil Tools Ltd was awarded on June 26, 2013, for one year and the contractor provided services on wells from June 20, 2013, to February 2016 for Rs7.822 billion ($76.688 million).

In the year 2016, the management got the sample of mud tested from different independent labs and found substandard, and the Executive Committee of the OGDCL decided to conduct the inquiry to ascertain the facts and circumstances by fixing responsibility for losses of OGDCL.

The audit officials told the committee that the outcome of the inquiry was not known to audit and since the management of OGDCL did not ensure regaular inspections through lab testing as per agreement; therefore; the quality of chemical and services were not know to the management throughout the period of the contract and this resulted in payment for substandard chemicals for Rs7.82 billion.

The audit was of the view that the supply of substandards chemical was made possible slackness on the part o fthe OGDCL management and the payment of Rs 7.82 billion was considered irregular.

The officials of the Ministry of Energy told the committee that the inquiry was going  while seeking 15-days time. The Committee gave a time of 15-days to the Ministry of Energy to complete the inquiry and submission of the inquiry report to the PAC.

The audit officials makes another revelation before the PAC that the IGDCL facing operational losses of Rs 7.44 billion from 17 non-viable fields during the period 2015-18. The audit officials told the committee that during the audit of the OGDCL, for the year 2015-16, it was observed that the company sustained operational losses of Rs 7.44 billion due to operating of 17 non-viable fields and the management did not make concrete efforts to make these fields as viable as referred in concession agreement of each filed.

MD OGDCL told the committee that there were some filds of 1980 which were producing 20 milliom cubic feet gas and those field where production decrease  its cost of production increase due to manpower expanses.

Examining another audit para, the audit officials told the committee that during the examinationof audit of OGDCL for the year 2015-16, it was observed that an amount of Rs 1.42 billion was paid to contractors for bringing of manpower for seismic parties during 2014-15 and 2015-16 without open competition and the management hired the services of thses contractors on the recommendations of the influential of concerned districts, which was not covered under the PPRA rules 20014.

Similarly, the audit told the committee that Party Chief of Engineering Party No-5 engaged manpower skilled and unskilled from open market for execution of pre-drilling, civil work at different locations and incurred an expenditure of Rs 13.94 million and the labour was engaged without obtaining competitive bids as required under PPRA rule 2004.

The committee seek report on this matter in 15-days time.

While examining another audit par, the audit officials told the committee that the OGDCL sustained a loss of 268.647 million due to irregular hiring of vehicles without any competitive competition. The audit officials told the committee furing the audit of OGDCL for the year 2015-16, it was observed that 5 seismic parties incurred an amount of Rs 185.34 million on hiring of vehicles during 2014-15 and 2015-16 and similarly, the management of Tando Allah Oil and Gas field also hired 50 vehicles on rent and paid an amount of Rs 83.30 million on rent of vehicles during 2015-16.

The audit said that the expenditure was incurred without inviting competitive bids throu press as required under PP Rules 2004. The officials of the Ministry of Energy replied that this matter be regularizes by the board.] The committee directed to present the verification of the board for its regularization and also their comments.

Article source: https://www.thenews.com.pk/print/240208-Use-of-faulty-chemical-in-drilling-caused-Rs782b-loss-to-nation-PAC-told