AGP questions Petroleum Division over delay in appointing committee chairpersons that left Rs1.44bn welfare fund unutilised

ISLAMABAD:The Auditor General of Pakistan (AGP) has held the Petroleum Division responsible for failing to appoint chairpersons of mandatory Social Welfare Committees, a lapse that blocked the utilisation of Rs1.439 billion earmarked for development projects in remote oil and gas concession areas during FY2023-24.

According to the audit report for the audit years 2024-25, "Social Welfare fund of Rs1,439.017 million was not utilized due to non-nomination of the Chairpersons of the Social Welfare Committees for all the districts of concession areas. Despite the request of DCOs / Secretaries of the Committees for nomination of the Chairpersons, Petroleum Division failed to nominate the Chairpersons. This resulted in non-utilization of Social Welfare fund of Rs1,439.017 million."

The audit noted that the funds comprise mandatory social welfare contributions made by local and foreign exploration and production (E&P) companies under the Petroleum Exploration and Production Policy, 2012, to improve the living conditions of communities residing in areas where oil and gas operations are carried out.

Quoting Annexure-III of the policy, the report states, "the amount of social welfare funds pledged by the companies (local and foreign) in their respective agreements must be utilized to give lasting benefit to the communities. Social welfare projects must be agreed with the local community and the civil administration as per guidelines issued by GOP from time to time."

The audit further pointed out that under the Guidelines for Utilization of Social Welfare Fund, 2021, district-level Social Welfare Committees are responsible for identifying and implementing projects according to local needs, with each committee required to be headed by a chairperson nominated by the Federal Minister.

However, despite repeated requests from Deputy Commissioners and the secretaries of the Social Welfare Committees, the Petroleum Division did not appoint the mandatory chairpersons, leaving the committees non-functional and Rs1.439 billion in social welfare contributions lying unutilised.

The lapse deprived communities living in Pakistan's oil and gas producing regions—many of them located in the remote and underdeveloped districts of Balochistan, Sindh, Khyber Pakhtunkhwa and southern Punjab—of projects relating to education, healthcare, clean drinking water, roads and other basic infrastructure that these funds are intended to finance.

The AGP observed that "non-compliance of the Social Welfare Guidelines resulted in non-utilization of social welfare contribution," holding the Petroleum Division responsible for failing to implement its own policy framework.

The matter was referred to the Petroleum Division in October 2024. During the Departmental Accounts Committee (DAC) meeting held on December 31, 2024, the management informed the committee that "the Chairpersons of the Social Welfare Committees were required to be nominated by Federal Minister which was under process."

The DAC directed the Petroleum Division to expedite the finalisation of the district committees. However, the audit report noted that "No further progress was reported till finalization of the report.

The AGP has recommended that the Petroleum Division immediately complete the nomination of chairpersons to operationalise the Social Welfare Committees and ensure timely utilisation of the Rs1.439 billion fund for the benefit of communities hosting Pakistan's oil and gas exploration and production activities.