ISLAMABAD: The Petroleum Division on Thursday sought parliament’s assistance for early disposal of more than three dozen requests pending for years with the defence authorities for security clearance.

Testifying before a Senate panel, Petroleum Secretary Sikandar Sultan Raja complained that Pakistan was facing challenges in the energy sector as most of the foreign petroleum exploration and development companies except one have left the country since.

Mr Raja said 30-40 exploration blocks were lying idle for long because of non-issuance of no-objection certificates (NOCs) by the defence authorities. “We have made best of efforts but these are not getting clearance from the defence. This is country’s loss,” he said, adding that the petroleum exploration and production generate a lot of business activity and create job opportunities besides ultimately leading to energy security and lower foreign exchange loss.

Mainly because of this reason, he said the authorities have not been able to offer any worthwhile block for exploration over the past few years. He said he would share the details of exploration blocks for which NOCs were requested along with dates to suggest for how long these have been pending.

Parliament’s assistance sought for security clearance of oil exploration requests

Chairman of the Senate Standing Committee on Petroleum Mohsin Aziz of the Pakistan Tehreek-i-Insaf assured the petroleum division that the committee would take up the matter at the forum concerned for resolution of the issue.

The petroleum secretary also told the committee that billions of rupees worth of funds collected from oil and gas firms under corporate social responsibility stood transferred to the provincial and district administrations for development works like school, health and water supply schemes.

However, he complained that these funds remained stuck up with deputy commissioners and assistant commissioners. Mr Raja said he had personally written to the provincial governments for early and transparent utilisation of funds through committees comprising local members of the National Assembly, but the outcome was not encouraging.

The committee sought contract for import of LNG from Qatar and record of bidding for setting up of two LNG terminals and alleged non-utilisation of their full capacity, causing additional costs to the consumers.

Managing Director of the Sui Southern Gas Company Limited (SSGCL) Amin Rajput told the committee that Engro Terminal had been paid Rs35.7 billion over the past three years for the $150 million investment and billed to consumers through the Sui Northern Gas Pipelines Limited (SNGPL). He said the SSGCL was not part of the bidding process conducted by the Interstate Gas Company (ISGC) in which Engro was selected for setting up of the terminal but the contract was signed by the SSGCL, Pakistan State Oil (PSO) and Engro with the approval of the federal government.

PSO Managing Director Sheikh Imran-ul-Haq told the committee that price with Qatar Gas for a 15 year LNG supply contract was finalised by a price negotiation committee (PNC) comprising a number of federal secretaries at 13.37 per cent of Brent on a government-to-government basis without bidding.

He said the price with Qatar was earlier finalised at 13.7pc of Brent but later brought down when it agreed to match price quoted for a similar supply contract with Gunvor through sport tender.

The ISGC Managing Director said his company was ordered by the government to process international bidding for LNG terminal and bids were evaluated by an international consultant. On finalisation of the bidding process, the SSGCL board approved it and the contract was signed with Engro for LNG terminal. He claimed that the bidding was transparent in line with procurement rules and the contracts were provided to the National Accountability Bureau and Procurement Regulatory Authority.

Adnan Gilani of Pakistan LNG said the Engro terminal never remained underutilised since March 2015, but terminal of Pakistan Gasport established in January 2018 remained underutilised by 50-60pc because lower demand by the power sector.

He said the LNG was nevertheless economical when compared to furnace oil and Pakistan was estimated to have saved $2bn so far by utilising LNG instead of furnace oil.

The Senate committee chairman was not satisfied with numbers and questioned why no capping or ceiling of the LNG price was ensured in the contracts that was finalised when crude prices were at the lowest and going up since then.

“Behind the energy crisis, we are buying something so expensive that is unbearable for the economy. So the crisis didn’t end but in fact the consumer is going to die,” he asserted.

He said it was a major flaw like capacity payments that were flowing down to the consumers because of unprofessional or questionable role of the officials. Therefore, the committee agreed to his suggestion to have an examination of the minutes of the negotiations. It was all the more important, they said, because the agreements were binding for 10-15 years.

The committee seems not satisfied with the explanations and ordered that minutes of the price negotiation committee, proceedings of bidding for terminal and contracts for LNG supply and contracts be produced in the next meeting to be held in camera on the request of petroleum division.

Published in Dawn, June 8th, 2018