State coffers looted of Tk 4,697cr by Petrobangla, BPC

The government was deprived of around Tk 4,697 crore for 19 counts of irregularities by Petrobangla and Bangladesh Petroleum Corporation, an audit has revealed.

The disclosure comes after the Comptroller and Auditor General (CAG) reviewed the books of 11 companies under Petrobangla from fiscal year 2014-15 to 2016-17 and two BPC companies for fiscal year 2013-14. The findings were presented to parliament in June.

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Irregularities include spending beyond the rules to purchase goods and services at high prices; flouting the instructions of the Ministry of Finance and the National Revenue Council; and in disregard of the Gas Sales Rules 2004 and 2014, Bangladesh Gas Act 2010, Bangladesh Energy Regulatory Commission, Public Procurement Act 2006 and Rules of 2008 on public procurement.

Of the Tk 4,697 crore that was lost, Petrobangla’s failure to fully deposit the value added tax and additional duties, collected from the gas distribution companies, to the treasury alone accounts for Tk 4,597.3 crore of Tk, found the CAG.

In the 2016-17 financial year, Petrobangla collected VAT and SD of Tk 6,015.5 crore, which it was supposed to deposit in Treasury.

But he deposited Tk 2,080.3 crore, keeping the rest in his accounts. There was 2% interest on the unpaid sum, which amounts to Tk 334.8 crore.

Thus, the state vault has an outstanding balance of Tk 4,270 crore of Petrobangla, according to the report.

In addition, in the financial year 2015-2016, Jalalabad Gas Fields, Sylhet, and Bibiyana Gas Field, Habiganj collected Tk 327.4 crore from gas distribution companies in TVA and SD. The sums were not paid into the state coffers.

Asked about the matter by the CAG audit team, Petrobangla said that the unpaid amount had been used to cover the shortfall resulting from the mismatch between its buying and selling prices of gas.

But in practice, the CAG found a separate fund created in March 2017 called “Support for Shortfall Margin” for this purpose.

Petrobangla acknowledged the anomaly pointed out by the CAG audit team and admitted that the VAT and SD were not properly forwarded to the state coffers.

There was no action, the report adds.

There was a financial loss of Tk 14.3 crore in the financial year 2016-17 just for not including transportation costs in the contract signed with the multinational oil and gas exploration company Tullow for the purchased gas, found the CAG. The transmission charge is the charge paid for the use of transmission lines to transport gas.

In accordance with the laws of the country, Petrobangla deducts 4% from the payment to the gas producers as a rollover fee.

But in the agreement signed with Tullow on June 6, 2008, there was no clause on the collection of haulage fees for the use of the transport network and the territory of Bangladesh for the delivery of its product.

When the CAG audit team inquired about the anomaly, no response was received, according to the report.

Another Tk 22.9 crore was lost for distribution fee payment to Titas Gas, which included system loss that occurred while importing gas from international oil companies.

Some of the gas is lost in transit when imported into Bangladesh. But there is no such loss when the imported gas is distributed to end users.

But Titas Gas claims otherwise and charged for the system loss that occurs during its distribution.

The CAG audit team requested an explanation for the irregularity, but no response was received.

Titas Gas also has a deficit of Tk 26.4 crore for non-adjustment of bills from Everest Power Generation Company.

Although Everest Power, BERC was granted a license to operate as a Commercial Independent Power Producer (CIPP) on June 21, 2016, it did not sign an agreement with the Rural Electrification Board for five months.

Its gas sales agreement with Titas was signed on January 4, 2017, meaning it was not entitled to the CIPP tariff until that date.

Its tariff was intended for small electricity producers but it paid the gas bill as a CIPP. Subsequently, Everest has Tk 26.4 crore outstanding.

The CAG audit team requested recovery of the sum as soon as possible.

In the financial year 2016-2017, the Bangladesh Petroleum Exploration and Production Company (BAPEX) paid Tk 8.3 crore to its officers and employees in the form of bonuses and special fees, which went against instructions from the Ministry of Finance.

The single salary was supposed to be performance-based in line with Finance Ministry orders, but BAPEX awarded the bonus on a wholesale basis.

Subsequently, the CAG asked to collect the disputed amount from the officers/employees and to deposit the sum in the company’s fund.

The state-owned oil exploration and production company also reimbursed its employees’ electricity and water bills, which amounted to Tk 1.9 crore.

Depending on their pay scale, employees are not entitled to such benefits. Permission from the Ministry of Finance is needed for such payments, which were not taken, according to the report.

Asked about the indiscretion, BAPEX said its employees were underpaid compared to foreign companies, so management thought of paying off utility bills in addition to their pay.

The CAG did not accept this justification as it goes against the decision of the Standing Committee of the Ministry of Power, Energy and Mineral Resources.

Subsequently, it asked BAPEX to collect the sum from its employees and managers and deposit it in the state coffers.

Karnaphuli Gas Distribution Company, a company owned by Petrobangla, was deprived of Tk 2.4 crore in fiscal years 2015-16 and 2016-17 for failing to disconnect the gas line of a customer – Sitalpur Steel Mills – despite the discovery of evidence of tampering with the meter read four times.

According to the Gas Sales Rules 2004 and 2014 and the Bangladesh Gas Act 2010, the connection should have been severed when the tampering was detected for the third time and the royalties collected at the earliest.

When pushed over his inaction, Karnaphuli Gas pinned him on the ongoing court case.

The response was not accepted by the CAG audit team, which called for legal action against the employees concerned.

The company also has dues of Tk 1.89 crore from SA Oil Refinery, an SA Group concern.

The refinery consumed more gas than its contracted volume from April 2009 to June 2017. But Karnaphuli Gas did not collect the dues due to SA Oil Refinery’s financial difficulties.

Subsequently, the CAG sought recovery of the unpaid sum and action against the officials responsible for the delay in recovery.

Jalalabad Gas suffered a financial loss of Tk 1.91 crore for collecting gas bills from Lafarge Surma Cement at a rate below the government fixed rate, the CAG audit team found.

State coffers were deprived of Tk 6.83 crore due to failure of Bangladesh Gas Fields Company to deduct income tax from contractor’s bill for supply of mining materials and of all services related to mining.

Another Tk 3.38 crore was lost for the failure of Pashchimanchal Gas Company Ltd to collect dues from Bablu CNG and the fueling station at Bogura which had set up an illegal line after its connection went down. interrupted by a mobile court.

PGCL is supposed to take legal action to collect the dues. No complaints have been filed, the report said, while calling for action to recover the sum.

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