ISLAMABAD: Regarding the planned sale of gas from a Kohat field without a bidding, the Prime Minister Office (PMO) and the Khyber Pakhtunkhwa government have asked the Petroleum Division for clarification.
Following media allegations that a minority shareholder in the recently produced Razgir field had completed the sale of gas to a third party through discussions rather than open bidding, the PMO reportedly issued the instruction on January 2.
The PMO had not received a response from the petroleum division yet.
The division was also informed by KP’s Directorate General of Petroleum Concessions (DGPC) that the Petroleum Policy, 2012, gave it the authority to decide on such deals.
A minority stakeholder suggests a sale to a third party, while another private partner expresses dissatisfaction at being “kept in the dark.”
According to DGPC Director Mian Nasim Javed, the shareholder’s procedure went against the Council of Common Interests’ (CCI) ruling.
In addition to envisioning a competitive process for the sale of gas to third parties, the CCI, which comprised the chief ministers of all four provinces, mandated that provincial rights under Article 158 be upheld in these transactions.
According to Mr. Javed, the KP government would not accept any agreement that violated Article 158 and the CCI’s ruling.
MOL-Pakistan, the gas field’s operator and 10% shareholder, informed its partners earlier this month that it had completed agreements to sell gas to Universal Gas Distribution Company Ltd (UGDCL), a private company.
With a 25 percent interest, Pakistan Oilfields Limited (POL) is the second private shareholder.
Three publicly traded firms own the remaining 65 percent of the shares: Government Holdings (Pvt) Limited (GHPL) (5pc), Oil & Gas Development Company Limited (OGDCL) (30pc), and Pakistan Petroleum Limited (PPL) (30pc).
According to documents that Dawn was able to view, MOL-Pakistan has requested approval from other shareholders in order to execute a gas sale purchase deal with UGDCL.
Through the agreement, UGDCL, situated in Islamabad, would be entitled to purchase gas for its private clients, primarily CNG stations, to be sold via Sui Northern Gas Pipelines Le (SNGPL) pipeline network in exchange for wheeling costs.
But according to POL, the natural resource, which is owned by public businesses 65 percent of the time, cannot be lawfully sold to a third party without competitive bidding.
Despite numerous calls and written inquiries, Dawn received no response from Petroleum Minister Musadik Malik, Secretary Momin Agha, or the managing directors of OGDCL, PPL, and GHPL.
Additionally, Ali Murtaza Abbas, the Regional Vice President of MOL-Pakistan, did not reply to written requests for comment.
The MOL-Pakistan has informed its partners that it has reached an agreement with UGDCL to sell 35 mmcfd of gas, which is the whole anticipated output from the Razgir field.
In accordance with the contractual agreements, UGDCL would buy gas at a premium of 16.5 percent over the Petroleum Exploration & Production Policy 2012, subject to a take-and-pay condition of 100 percent.
POL has protested this deal and said that they were “kept in the dark” about the conditions and talks that were reached.
To prevent any potential issues, POL requested in letters to other shareholders that the sale of gas from the field be put to a competitive bidding process before deciding on a buyer and price.
According to Ghias Abdullah Paracha, UGDCL’s CEO, his company and MOL-Pakistan inked a contract in March 2023 for 15 mmcfd of gas from the Mamikhel field.
UGDCL was required under the agreement to buy gas going forward.
“Under the same agreement, this transaction is proceeding,” he continued.
Some new companies with “no experience of gas sales,” according to Mr. Paracha, were attempting to “spoil the market.”
He said that under a 100 percent take-and-pay approach, the UGDCL had set the greatest premium ever on the price of gas producers.
Mr. Paracha claims that UGDCL was obligated to pay in advance and even agreed to reimburse the SNGPL for 11 percent of the system losses rather than the full 6.5 percent for the transportation and wheeling of gas to its customers from the Mamikhel and Razgir fields.
“This is on top of taxes, duties, and the government’s windfall levy.”
According to him, the two government-owned companies, Pakistan LNG Limited and a Punjab government company, had no interest in the deal, and none of the private gas distribution licensees were qualified for it.
He claimed that he had even proposed to the government to buy extra LNG from Sui gas companies so that he could resell it to his clients for a small profit.
