ISLAMABAD: The Supreme Court allowed the federal government on Monday to transfer its 10 per cent shares in Oil and Gas Development Company Limited (OGDCL) to the successful bidder.

But the permission came with a condition that the amount generated from the divestment would be deposited in the Federal Consolidated Fund (FCF) till the Supreme Court decides on the government’s appeal against the Oct 3 interim order of the Peshawar High Court staying the sale of OGDCL’s 10pc or 322 million ordinary shares.

A three-judge bench headed by Chief Justice Nasir-ul-Mulk hearing the government’s appeal issued notices to the law officers of Punjab, Sindh and Balochistan. Khyber Pakhtunkhwa is already being represented before the court.

On Oct 9, the apex court had allowed the government and the Privatisation Commission to accept bid offers from the buyers but not to transfer the shares till the court’s decision on the appeal. Subsequently, the court summoned the entire case relating to OGDCL privatisation from the PHC.

Govt asked to deposit divestment money in FCF till decision on appeal

A division bench of the PHC had issued the interim order on a petition moved by the KP government against the sale of OGDCL shares.

On Monday, senior counsel Waseem Sajjad, representing the KP government, emphasised that the 18th Amendment had amended Article 172(3) of the Constitution, which deals with the ownerless property in a province, in such a way that natural resources would now have to be equally distributed among the provinces.

He said the actual worth of the shares being divested had not been worked out so far and suggested that every province should have a mechanism to work out equal shares among the federating units.

The counsel said the apex court should restrain the government from selling the OGDCL shares because KP had not been consulted. He argued that the government had mainly relied on the 1997 decision by the Council of Common Interests (CCI), but the entire situation had now been changed, especially after the amendment to Article 172(3).

But the chief justice observed that the government was not divesting the entire ownership of OGDCL, but only 10pc of its shares in the company.

Attorney General Salman Aslam Butt explained that the word ‘vest’ used in Article 172(3) did not mean that it also bestowed the complete ownership of natural resources in a province. That asset or a property is in fact a public trust and belongs to the entire nation.

He said OGDCL with an exploration license and a production lease was a public limited company like 28 other companies and the provinces had shares only in the lease money, concessions and royalty on minerals, oil and natural gas and could not have a claim on the entire company.

He said a company did not need a prior permission from the provinces if it decided to sell its share. However, he added, the provinces had the right to claim equal shares if there was an issue of royalty.

The AG argued that the CCI had approved the sale of OGDCL shares in 1997 – a provision which was covered under Article 173 of the Constitution dealing with the power of the federation to acquire a property and make contracts.

He said the KP government was trying to create an impression that there was a national economic crisis which did not exist. It could severely affect the foreign investment in the country.

He said the value of OGDCL share had come down to Rs20 because of the stay granted by the high court and it would further decline if the uncertainty continued. The loss on this account runs into hundreds of millions of rupees.

In its appeal, the government pleaded that the PHC’s Oct 3 interim order was arbitrary, perverse and unreasoned and, therefore, liable to be dismissed in the interest of justice.

The case will be taken up after three weeks.

Published in Dawn, October 21st , 2014