Financial irregularities have reportedly been running rampant within Petrobangla, with a recent audit finding discrepancies worth over Tk6,500 crore by the state-owned entity for the 2012-13 fiscal.
A four-member team of the Commercial Audit Directorate went through the books of Petrobangla for two months to come up with the irregularities, most of which were related to international oil companies (IOC). The team submitted its audit report to the chief of the directorate on April 10.
The report, a copy of which has been acquired by the Dhaka Tribune, read that irregularities were commited when Petrobangla paid cost recovery demands to IOCs without scrutinising their claims; securing illegal benefits from banks by keeping the funds acquired from selling profit gas in bank accounts instead of the government treasury; and paying irregular advance income taxes (AIT) on foreign equipments bought by the oil companies.
The payment of cost recovery claims without proper scrutinisation resulted in discrepancies of over Tk3,453 crore, the report read, adding that the IOCs did not submit any proof of their development works attached to their bills or invoices.
For the 2012-13 fiscal, Petrobangla paid US-based oil company Chevron Tk2,801 crore for Bibiana gas field, Tk361 crore for Jalalabad gas field, while paying London-based Irish company Tullow Tk291 crore in cost recovery claims.
According to the production sharing contract (PSC), Petrobangla has to pay all costs related to gas extraction and development works carried out by the IOCs as “cost recovery.” Each month the IOCs submit invoices to Petrobangla by mentioning the amount of the month’s produced gas and its price.
Another observation by the audit team said the government suffered over Tk3,118 crore in losses as Petrobangla violated existing rules by depositting the money collected from selling profit gas (Tk2,395 crore) and natural-gas condensates (Tk723 crore)into its own bank account, instead of the government treasury.
According to the PSC, apart from the cost recovery, the surplus gas that belongs to Petrobangla is known as “profit gas.”
The audit team also observed that Petrobangla incurred losses of over Tk11 crore for irregularly paying advance income taxes (AIT) for the purchase of equipment by the IOCs.
According to the PSC, the IOCs are exempt from paying advance income tax for the import of equipments for oil or gas exploration and extraction; instead Petrobangla will need to submit the AIT on the company’s behalf into the treasury funds within 90 days of unloading the equipments.
The audit report read that the discrepancy is created when IOCs pay the taxes during the unloading of goods and later bill Petrobangla for reimbursement. However, the reimbursement invoices only include a copy of the bank cheque, but no details on the imported equipment.
The audit report recommended that necessary steps be taken for scrutinising the cost recovery claims, ensuring that funds from selling profit gas are deposited in the treasury funds, and for ensuring that the IOCs had paid AITs on behalf of Petrobangla.
However, Petrobangla Chairman Hossain Mansour denied the allegations and told the Dhaka Tribune that all the procedures had been carried out without violating any regulation. Refusing to comment in detail, the chairman said he did not know how the audit team had found the irregularities.
