Centre, KP seek clarity on gas sale ‘in violation of rules’
ISLAMABAD: The Prime Minister Office (PMO) and the Khyber Pakhtunkhwa government have sought clarity from the Petroleum Division over the proposed sale of gas from a field in Kohat without bidding.
According to sources, the PMO had issued the directive on January 2 after media reports that a minority shareholder of the newly developed Razgir field had finalised the sale of gas to a third party through negotiations instead of open bidding.
The petroleum division had yet to respond to the PMO.
KP’s Directorate General of Petroleum Concessions (DGPC) has also reminded the division that it had the power to make a decision on such sales under the Petroleum Policy, 2012.
Minority shareholder proposes deal for sale to third party; other private partner complains of ‘being kept in dark’
The process adopted by the shareholder was against the decision made by the Council of Common Interests (CCI), DGPC Director Mian Nasim Javed said.
The CCI, which included chief ministers of all four provinces, envisaged a competitive process for the sale of gas to third parties and also stipulated that provincial rights under Article 158 should be protected in such deals.
Mr Javed said any arrangement violating Article 158 and the CCI’s decision would not be acceptable to the KP government.
Earlier this month, MOL-Pakistan, the operator and 10 per cent shareholder of the gas field, told its partners that it had finalised the sale of gas to a private firm, Universal Gas Distribution Company Ltd (UGDCL), through negotiations.
Pakistan Oilfields Limited (POL) is the second private shareholder with 25pc stakes.
The remaining 65pc shares are held by three public companies: Pakistan Petroleum Limited (PPL) (30pc), Oil & Gas Development Company Limited (OGDCL) (30pc) and Government Holdings (Pvt) Limited (GHPL) (5pc).
MOL-Pakistan has sought consent from other shareholders for signing of gas sale purchase agreement with UGDCL, according to documents seen by Dawn.
The deal would enable the Islamabad-based UGDCL to acquire gas for its private customers, mostly CNG stations, to be sold through a pipeline network of Sui Northern Gas Pipelines Le (SNGPL) on payment of wheeling charges.
However, POL has claimed that the natural resource, overwhelmingly (65pc) owned by the public companies, could not be legally sold to a third party without competitive bidding.
Dawn reached out to Petroleum Minister Musadik Malik, Secretary Momin Agha, and managing directors of OGDCL, PPL, and GHPL, but none responded to repeated calls or written questions despite reminders.
MOL-Pakistan’s Regional Vice President Ali Murtaza Abbas also did not respond to written requests for comments.
The MOL-Pakistan has told its partners that its negotiations have concluded with UGDCL for the sale of 35mmcfd gas, the total expected output from the Razgir field.
Under the commercial terms, UGDCL would purchase gas at 16.5pc premium over the Petroleum Exploration & Production Policy 2012, against a 100pc take and pay condition.
POL has objected to this transaction and complained of being “kept in the dark” over the negotiations and concluded terms.
In letters to other shareholders, POL demanded a competitive bidding process for the sale of gas from the field before finalising the buyer and price to avoid any potential complications.
Ghias Abdullah Paracha, the chief executive officer of UGDCL, has said his company signed an agreement with MOL-Pakistan in March 2023 for 15mmcfd gas from the Mamikhel field.
Under the agreement, UGDCL was bound to purchase gas in future as well.
“This transaction is progressing under the same agreement,” he added.
Mr Paracha alleged that some new players having “no experience of gas sales” were trying to “spoil the market”.
He said the UGDCL had given the highest ever premium on gas producer price and that too on 100pc take-and-pay model.
According to Mr Paracha, UGDCL was required to make advance payments and had even agreed to pay for 11pc system losses to the SNGPL instead of the actual 6.5pc for transportation and wheeling of gas from Mamikhel and Razgir fields to its customers.
“This is in addition to duties and taxes and windfall levy to the government.”
He said none of the private gas distribution licensees were eligible for the transaction, while the two government-owned entities, Pakistan LNG Limited and a Punjab government firm, were not interested in the deal.
He said he had even offered the government to purchase surplus LNG from Sui gas companies for him to sell to his customers at a minimal profit.
Published in Dawn, January 20th, 2025