The National Assembly’s Public Accounts Committee (PAC) has been told that oil companies collecting petroleum levy from consumers are not depositing the full amount into the national exchequer, exposing serious weaknesses in enforcement and oversight and contributing to losses running into billions of rupees.

The disclosure was made on Tuesday during a PAC meeting chaired by Syed Naveed Qamar, which reviewed audit reports of the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) for the financial year 2023-24.

The committee examined irregularities linked to petroleum levy, late payment surcharge (LPS), subsidies, recovery failures and procurement violations.

Director General Oil informed the committee that around Rs1,400 billion is collected annually as petroleum levy, but there is no effective mechanism to ensure that companies deposit the entire amount into the national treasury.

Chairman Naveed Qamar remarked that the situation effectively meant there were no consequences for non-payment.

PAC member Shazia Marri said the public was being squeezed through levies while companies faced weak enforcement, adding that consumers should be given relief if the government lacked a clear recovery system.

The committee directed authorities to tighten laws and procedures governing levy recovery.

During the meeting, the PAC was informed that Cnergyico and Hascol collectively owed Rs14.63 billion in petroleum levy and penalties, but only Rs190 million had been recovered so far. Expressing strong displeasure, the chairman termed it a serious lapse and said the long-pending case reflected grave negligence.

The petroleum secretary told the committee that Hascol had paid its dues, but the amount was deposited into an incorrect account. The auditor general clarified that the account had since been closed, making correction of records impossible. The PAC subsequently disposed of the Hascol case.

On Cnergyico, the petroleum secretary said the company was required to pay Rs47 billion over four years in 48 instalments under an agreement with the government, while an additional Rs21 billion was outstanding as late payment surcharge.

He said negotiations on the LPS were ongoing and instalment payments had begun.

Chairman Naveed Qamar noted that the deal had been facilitated through the Special Investment Facilitation Council (SIFC) and sought a written reply on the LPS issue within two weeks.

The committee was also told that Rs1 billion earned from the sale of technical data had been parked in a commercial bank’s current account for the past eight years, despite clear Ministry of Finance instructions to deposit the amount into the national exchequer. The petroleum secretary confirmed the funds were kept in a current account, prompting the PAC chairman to term it criminal negligence. The committee ordered immediate identification of responsible officials and directed that the amount be deposited without delay.

The PAC reviewed the provision of a Rs28 billion RLNG subsidy to exporters during FY2022–23.

Audit officials said the Petroleum Division neither obtained quarterly utilisation reports nor verified whether exports increased after the subsidy.

They added that no reports were submitted to the ECC and no third-party audit was conducted. While officials said the subsidy was granted under cabinet and ECC directives, the committee ruled that all future subsidies must undergo mandatory third-party audits.

Another issue discussed was the non-payment of Rs1 billion in late payment surcharge by SNGPL, SSGC and Pakistan Petroleum Limited.

DG Oil said total outstanding LPS liabilities across companies stood at Rs222 billion.

The PAC chairman said this violated a Supreme Court ruling, while member Bilal Ahmed Mandokhail noted the apex court had issued clear instructions on the matter.

The committee sought a report from the Ministry of Law and Justice and directed the Ministry of Petroleum to present a comprehensive recovery roadmap within two weeks.

The PAC was further informed that a dispute between UEP and Pakistan Petroleum Limited could result in a potential loss of Rs76 billion.

PPL officials said UEP had obtained a stay order from the Sindh High Court, while subsequent legislation by the Sindh Assembly led to four cases being transferred to lower courts.

DG Petroleum Concessions said UEP had refused to accept a study conducted to resolve the dispute, drawing strong criticism from the committee over his performance.

The PAC gave the Petroleum Division two weeks to resolve the matter.

Audit paras relating to losses of Rs85.9 million due to the award of a reservoir study contract to a foreign company in violation of rules, and an additional Rs2.42 billion cost arising from irregular procurement in a pipeline project, were also discussed. While audit officials termed the cost escalations a breach of rules, Petroleum Division officials cited the Covid-19 pandemic as the reason.

The PAC directed auditors to verify the division’s stance with Pakistan Petroleum Limited.