Rs3.7bn from Gas Infrastructure Development Cess used for loan repayments, PAC told

The Public Accounts Committee (PAC) has been informed that Rs3.7 billion from the Gas Infrastructure Development Cess (GIDC), meant for energy projects, was diverted to repay loans. The revelation came during a meeting chaired by Junaid Akbar of the Pakistan Tehreek-e-Insaf (PTI), where audit reports detailing Rs4.238 trillion in financial matters from the Petroleum Division and its affiliated departments were presented.

According to media reports, the committee reviewed Rs3.178 trillion in audit paras related to the Ministry of Petroleum. The audit report on the Iran-Pakistan gas pipeline project showed that as of June 30, 2023, the government had collected Rs350.703 billion under GIDC, originally designated for major projects, including the Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipelines. 

However, audit officials revealed that only Rs3.343 billion had been spent on operational costs of Inter State Gas Systems Limited (ISGSL) and loan repayments to Government Holdings Private Limited (GHPL), while Rs3.7 billion was used for unrelated loan settlements.

PAC members questioned why funds collected from the public for gas infrastructure projects were not utilized for their intended purpose. The Petroleum Division responded that international sanctions had prevented the government from proceeding with the Iran-Pakistan pipeline, leading to a delay in fund utilisation. 

PPP’s Hina Rabbani Khar argued that if global restrictions were in place, the cess should not have been collected, urging the committee to redirect Rs350 billion to alternative projects. 

The PAC instructed the Petroleum Division to submit a detailed plan within a month on how the unutilized GIDC funds should be spent.

The Petroleum Secretary informed the committee that the GIDC law, introduced in 2015, was declared void by the Supreme Court in 2020. He stated that negotiations with Iran regarding the pipeline were ongoing and that Rs1 billion had already been spent on the TAPI project. He requested an in-camera briefing to discuss the Iran-Pakistan pipeline issue in detail, adding that the funds were being used for legal matters related to the pipeline dispute, which had reached the Paris Court.

PAC members also examined Rs33.915 billion in gas development surcharge (GDS) that was under-collected from fertilizer and power companies in FY 2022-23. 

PPP’s Naveed Qamar argued that the federal government had no right over GDS, stating that the amount belonged to provinces and alleging that the government had favored fertilizer companies. 

Audit officials confirmed that the Petroleum Division had failed to collect Rs33.915 billion in GDS. The Director General of Gas explained that the shortfall resulted from subsidies provided to the fertiliser sector.

The committee also discussed legal amendments related to GIDC and GDS collections. When PAC members sought an update from the Law Ministry, its representative failed to provide an answer, prompting committee members to express dissatisfaction. 

PAC decided to write a letter of displeasure to the Law Secretary and urged the Prime Minister to convene a meeting of the Council of Common Interests (CCI) to resolve the issue. 

PAC Chairman Junaid Akbar directed the Petroleum Ministry to submit an action plan within a month regarding the utilization of unspent GIDC and GDS funds.