FIA digs into claims of financial misconduct in LPG imports

• Agency’s probe comes on SIFC’s orders, focuses on SSGC’s liquefied petroleum gas operations
• Gas utility’s board reportedly suspends services of executives nominated in complaints

ISLAMABAD: The Federal Investigation Agency (FIA) has started an investigation into the allegations of illicit imports and operational irregularities within the liquefied petroleum gas (LPG) sector, following directives from the Special Investment Facilitation Council (SIFC).

These allegations, purported to have caused losses worth billions of rupees to consumers and the country’s foreign exchange reserves, are now under scrutiny under the Anti-Money Laundering Act (AMLA) 2010 and the Code of Criminal Procedure (CrPC).

The investigation focuses on the management of Sui Southern Gas Company Ltd (SSGC) and several top executives of its subsidiary, SSGC LPG Ltd (SLL). Sources said the SSGC’s board had reportedly suspended the services of the executives nominated in the complaints.

The FIA’s probe came after the SIFC, a high-level civil-military forum, reportedly ordered the agency to investigate the matter in detail following complaints from certain individuals, including people involved in the LPG business, and a report from an intelligence agency that contained allegations of irregularities in almost the same language.

In separate call-up notices, the investigation agency has asked top SSL executives to appear before its inquiry committee on March 12 (tomorrow) and has separately asked the petroleum division to cooperate into the matter by deputing a focal person and making available entire records relating to the matter.

A spokesperson for the SSGC, Salman Siddique, confirmed to have received notices from the FIA that had been approached by a few individuals and an association of LPG business with certain concerns based on which the FIA had raised specific questions.

“We are replying on the merits of each and every query that we have received” from the federal agency, either on concerns raised by individuals or the association, Mr Siddique said.

He, however, denied reports about the suspension of any of its executive, saying they were working on their respective assignments and any such thing could only be “disinformation or misinformation”.

In one of its communications, the FIA wrote that the Special Investment Facilitation Council reiterated serious allegations against SSGC, SLL, and other stakeholders, individuals, and entities.

It added that the SIFC had also expressed serious concerns regarding “unauthorised importation of LPG, illegalities and irregularities in the expenditure of foreign reserves and involvement of SSGC and SLL’s management in the bogus tendering process, corruption and misuse of authority”.

The investigation agency said the SIFC had also sought a detailed report on the illegalities and irregularities in LPG imports and related operations.

An official said that because of LPG shortages and price hikes recurring every year due to the involvement of unscrupulous market players, the federal government had instructed the two state-owned gas utilities — SSGC and SNGPL — a couple of years ago to start LPG imports for supply through their network to consumers at reasonable rates to create a competitive environment.

This was challenging for the state-owned enterprises (SOEs) given the long procurement process, while the private operator had the freedom to secure LPG cargoes, even those in distressed environments, on a day’s notice.

With the approval of the federal government and the board of directors, the SSGC created a special purpose vehicle — SLL — with the freedom to procure LPG cargoes on short notice if these were competitive or cheaper than the private sector.

The complaints mostly pertained to deficiencies in procurement rules and the pressure tactics by a few powerful market players to oust SOEs from the LPG business.

The FIA asked the petroleum secretary under Section 25 of AMLA 2010 to nominate a representative as a focal person to help the agency finalise the inquiry as soon as possible regarding the allegations of corruption and corrupt practices against managements of SSGC, SSL and others, who, “in connivance with each other, have orchestrated a scheme to hinder indigenously produced LPG, leaving the stakeholders with no other option but to import LPG, causing direct or indirect losses amounting billions of rupees to the national economy”.

“Such alleged acts have promoted monopolistic practices, black marketing of imported LPG and practical control of select individuals over LPG supply translating to guild-price control and exploitation of the population’s poorest quintile,” the FIA said.

It asked the petroleum division to provide details of the exemption of procurement rules provided to the SLL to arbitrarily negotiate with the purported most advantageous bidder for the procurement or import of LPG and whether such exemption could be provided under the laws.

The agency also sought complete records, “including noting portions” of the approvals granted by authorities concerned regarding exemption from procurement rules for LPG.

Published in Dawn, March 11th, 2024