ISLAMABAD, Oct 15: Privatization Commission signed here on Monday an agreement with Shell Gas LPG (Pakistan) Limited and Sui Northern Gas Pipelines Limited (SNGPL) for the divestment of the LPG business of SNGPL.

The agreement was signed by acting secretary Privatization Commission, managing directors of SNGPL and Shell Gas in the presence of Mr Altaf M Saleem, minister for privatization. Chairmen of SNGPL and Shell Companies in Pakistan and senior representatives from M/o Petroleum & NR and the Privatization Commission were also present.

Mr Altaf Saleem termed the event as significant in the present circumstance and said that the companies like Shell had stayed with their commitments by reposing confidence in the government’s economic programmes.

Privatisation Commission had conducted bidding for this transaction in August 2000. Since a satisfactory price was not received it was decided to conduct a second round of bidding.

The second bidding was held in February 2001, in which four parties participated. Shell Gas gave the highest bid of Rs142 million and the Cabinet Committee on Privatisation approved the deal.

The commission has also completed the privatization of the LPG business of Sui Southern Gas Company (SSGC) in November 2000 to Caltex Oil Pakistan Limited for Rs369 million.

The privatization of the LPG business of various state-owned enterprises is part of the government’s overall reform strategy for the LPG sector initiated by the Ministry of Petroleum and Natural Resources. The availability of LPG as well as reduction in prices due to this deregulation has greatly benefited the small consumer.

With this purchase, Shell Gas has acquired not only the physical assets, consisting of storage and bottling facilities at Meyal and Dhunnal, but also an allocation of 9,500 tons of LPG from the Parco mid-country refinery.

Shell Gas was encouraged to bid for SNGPL’s LPG assets because of the deregulation policy recently adopted by the Ministry of Petroleum and Natural Resources.

In addition to this investment, Shell has also made a number of investments in the upstream business. Shell Development & Offshore Pakistan BV (SDOP), acting as the exploration and production arm of the Royal Dutch Shell group in Pakistan has recently executed an agreement with Premier Oil which will result in a re-allocation of assets. According to this agreement, SDOP will manage shares of the Kirthar Block Exploration Licence (33.25%) and the Development & Production Licences, Bhit, (28%) that will be held by Kirthar Pakistan BV (KPBV). Total Shell-share investment in the Bhit project will increase from $57m to $80m as a result of these changes.

In the downstream business, Shell has invested over Rs6.4 billion since 1993 and by the end of 2002 will have invested more than Rs9 billion in Pakistan. The investments have been made in infrastructure development, upgrading of retail outlets, customer service standards, quality control measures, IT systems and communications.

According to Shell, its commitment to the economic and infrastructure development of the country is manifested in its 26 per cent share in the upcoming White Oil Pipeline Project (WOPP) amounting to Rs2.3 billion. The pipeline project will cost $480 million and will help in bringing about transportation efficiencies in an environment-friendly manner.

Shell has also contributed over Rs62 million in it’s social investment programme. This programme is aimed at developing the social infrastructure in the country and includes support for organizations in the fields of health, education, welfare and heritage.