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Distinguished figures among LPG quota beneficiaries

By Khawar Ghumman
Thursday, 07 Jan, 2010

ISLAMABAD: The Public Accounts Committee (PAC) of the National Assembly has called for a review of the mechanism for fixing the price of liquefied petroleum gas (LPG) to end what it termed monopoly of a private sector company which, some PAC members alleged, has been showering favours on influential people to strengthen its control on the sector.

At a special meeting of the committee held on Wednesday, Khwaja Asif of the PML-N and another member said that a former prime minister, former chairman of NAB, former governor of Punjab, two former interior ministers, a sitting federal minister, incumbent president of the National Bank of Pakistan and a prominent leader of the lawyers’ movement were among a large number of people who had been granted the quota by the Jamshoro Joint Venture Ltd (JJVL) on favourable terms.

According to Mr Asif, JJVL Chairman Iqbal Z. Ahmad had shared with almost everybody “in the corridors of power” the windfall profits he had managed over the years in the LPG sector.

The PAC meeting discussed the recent 18 per cent increase in gas price by the Oil and Gas Regulatory Authority (Ogra) and continuous losses reported by both Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL). PAC chairman Chaudhry Nisar Ali of the PML-N presided over the meeting.

Mr Asif said that those who had benefited from Mr Ahmad’s “benevolence” included former prime minister Chaudhry Shujaat Hussain, former chairman of NAB Gen (retd) Munir Hafeez, federal Minister for Investment Senator Gulzar Ahmad, former interior ministers Gen (retd) Moeenuddin and Aftab Sherpao, former governor of Punjab Gen (retd) Khalid Maqbool, NBP President Syed Ali Raza and Barrister Aitzaz Ahsan.

These people, he said, got gas companies registered in the names of their relatives and they earned millions of rupees from the LPG quota given by the JJVL.

Others beneficiaries included Captain (retd) Bisharat and Brigadier (retd) Siraj, friends of Gen Pervez Musharraf; Gen (retd) Tariq Majeed; Humayun Farid, diplomat; Gen (retd) Rehmat Khan, Chairman of Pakistan Cement; Rizwan Punjwani, head of NBP Credit, Karachi; Ishtiaq Asif of NBP, Karachi; and Jamal Akbar Ansari, a friend of Iqbal Ahmad.

“By all means it was bribe which Mr Ahmad used to get favours from people in power,” Mr Asif said. Members of the PAC representing PPP, PML-Q, and PML-N supported the contention that the LPG quota had been misused.

Accepting the fact that massive irregularities had been committed in the past, Secretary Petroleum Mahmood Salim Mahmood said the LPG sector needed a thorough scrutiny, especially its price fixing mechanism. Since the JJVL had a monopoly in the market it was doing business at its own terms, the secretary argued.

Last month, the Competition Commission of Pakistan (CCP) had imposed a fine of Rs278 million, around 4 per cent of profits, on the JJVL for cartelisation in the LPG sector.

The PAC was informed that the production cost of one kg of LPG was Rs9, and it gas was sold at Rs72 to the end consumer. And, 95 per cent of LPG is produced locally. “With this kind of price mechanism in place, we are mercilessly fleecing our poor people,” Rana Mehmoodul Hassan, another member of the committee remarked.

When asked, Ogra Chairman Touqir Sadiq said that under the existing rules the authority had no provision to check profit-making in the LPG sector.

The committee asked the secretary petroleum and natural resources to come back in 10 days with an actionable plan to effectively control the LPG price.

The committee also directed managing directors of the SSGC and SNGPL to explain their price mechanism in the next meeting with special reference to the recent 18 per cent increase in gas price. “Don’t force people to come on the road,” Chaudhry Nisar remarked.

He criticised the government and said it appeared to be “sleeping on the issue of gas price. Had it been managed well, there was no need to call this special meeting of the PAC.”

The committee decided to conduct a special audit of both the gas companies and asked Auditor General Tanvir Ali Agha to make arrangements for the purpose.
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Haroon-ur-Rasheed’s column on this topic:

Here is Aitzaz Ahsan’s explanation in Daily Jang (11 Jan 2010) in response to Haroon-ur-Rasheed’s column:

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