ISLAMABAD: The Auditor General of Pakistan has pointed out losses of about Rs10 billion to the national exchequer in 2012-13 because of irregularities in Pakistan State Oil and massive violation of rules and political interference in its administrative affairs.

Besides financial irregularities, the 100-page audit report has pointed out dozens of irregular promotions and appointments on senior management positions, including that of the managing director and deputy managing directors on external pressure, in addition to those coming directly from the prime minister’s secretariat.

The violations include suspicious verification of degrees of senior executives.Although the recent settlement of Rs480bn circular debt was not the subject of the audit, the report found faults with the arrangement under which in just one case, the PSO is estimated to have suffered a loss of Rs1.140bn because of non-recovery from independent power producers.

In its reply, the PSO management did not contest the reference to irregularity but said the loss was caused due to instructions of the water and power ministry to provide furnace oil to IPPs – particularly Saba Power and Southern Electric – on credit and efforts were being made to recover the amount.

It said that under settlement of the circular debt the government initially included Saba Power and Southern Power for payment of amounts due on account of supply of furnace oil by the PSO. But later they were excluded. The audit said the claim about possible recovery was not tenable as the plants of both companies were non-operative and hence responsibility should be fixed and amount be recovered.

The report also pointed out overpayment of Rs5.4 million to a former managing director of PSO and irregular appointment of deputy managing director finance and information technology. It said the external pressure for promotions and inductions was so serious that ministers and the PM’s secretariat used to dictate them. In some cases the officers wrote protest notes on files but met political demands.

The audit report also highlighted Rs3.9bn blocked because of supply of furnace oil to the Karachi Electric Supply Company at the rate of natural gas despite a massive gap between the two prices and pointed out Rs541m unjustified payment of pension to a few employees.

It said the PSO also suffered colossal losses because of increased sales to retailers ahead of price revisions. A loss of Rs93m was caused in demurrage claims due to abnormal delays and Rs14m on irregular leave encashment.

A loss of Rs18m was caused to the PSO during the current year because of excess payment to a deputy managing director and Rs71m because of irregular and non-transparent award of a contract. Illegal hiring of legal counsel to defend contempt of court proceedings against a managing director for not obeying court orders has also been noted.

Another loss of Rs1bn was caused to the exchequer because of irregular inclusion of import duty on high speed diesel purchased locally, while a loss of Rs870m was due to non-submission of copies of different contracts to national accountability.

Irregularities were also found in modernisation of petrol pumps and tank-lorry calibration, imprudent investments in one-stop shops, theft of diesel and furnace oil, misappropriations and non-recovery of share for upgradation of retail outlets from the private sector.