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Abbasi ousts long-time aide in row over funds for LNG

Updated October 10, 2017
GHAZI BAROTHA: A view of Ghazi Barotha, a run of the river hydropower project just downstream of Tarbela dam. Net Hydel Profits (NHP) from it belong to Punjab govt while Tarbela's NHP goes to KP.— File photo
GHAZI BAROTHA: A view of Ghazi Barotha, a run of the river hydropower project just downstream of Tarbela dam. Net Hydel Profits (NHP) from it belong to Punjab govt while Tarbela's NHP goes to KP.— File photo

ISLAMABAD: The government has replaced a long-time aide of Prime Minister Shahid Khaqan Abbasi with another contractual executive on additional charge basis.

An informed source said the government has removed Shahid-ul-Islam as managing director of the Government Holdings (Pvt) Limited (GHPL) — a company under the petroleum division — for his refusal to divert company funds to another subsidiary dealing with Liquefied Natural Gas (LNG) namely Pakistan LNG Limited (PLL) because of legal and constitutional limitations.

The assignment was given to Mobeen Solat on additional charge basis who is already holding the charge of two other subsidiaries of the GHPL namely Interstate Gas Company Ltd (ISGCL) and the PLL.

The GHPL was created more than a decade ago to control a minimum of five to ten per cent shareholding in oil and gas exploration wells and fields in all the four provinces, which the public and private local and international companies were bound to transfer to the government free of cost. The government has the rights to increase this shareholding in case of commercially viable oil and gas discoveries.

The funds are meant under the constitutional requirements to be spent on development of exploration and development activities in the high risk and high cost areas. For example, part of its funds was used for the development of Thar coal in the past.

However, the ministry of energy wanted the diversion of GHPL funds to LNG related activities, which the provinces cite as a reason for lack of focus on fresh oil and gas exploration and production activities. The sources said the GHPL was also asked to arrange more than Rs2 billion worth of standby letter of credit (SBLC) to an upcoming LNG terminal besides continuously financing three other subsidiaries of the petroleum division i.e. Pakistan LNG Ltd, Pakistan LNG Terminal Ltd and ISGCL.

The sources said Mr Islam had declined to fund the cost for PLL and PLTL out of GHPL funds since the money belonged to provincial divisible pool. Mr Islam had also declined to give several billion rupees of SBLC to an upcoming terminal operator on behalf of PLTL quoting the same reason.

The sources said the provinces had already complained that PLL and PLTL had been illegally put under GHPL along ISGSL, claiming that it was infringing upon the provincial divisible pool money.

Mr Islam has been a very close aide to Prime Minister Abbasi when he was chairman of the Pakistan International Airlines (PIA) and spent time together in jail in the plane hijacking case. He was also the director finance of PIA and brought back from London after 10 years of retirement while being based in the UK and made head of GHPL.

In between, Mr Islam was also given charge as managing director of Pakistan State Oil on a temporary basis during which the LNG import deals were finalised a couple of years ago.

Mr Solat as managing director of the ISGSL was instrumental in the award of LNG regasification project to Engro Elengy on behalf of the Sui Southern Gas Company on a single bid basis. The second bidder Pakistan GasPort was disqualified on technical grounds when the project was given at significantly higher processing charge to Engro.

Interestingly, Pakistan GasPort had earlier been technically qualified by petroleum ministry prior to Engro bid in the previous regime. Mr Solat was removed as permanent managing director of ISGSL when its former chairman board of directors Shahzad Ali Khan complained to then PM about manipulation of board minutes. Mr Khan was also removed from the board and the former prime minister Nawaz Sharif instituted a high level inquiry headed by a secretary. The inquiry still remains inconclusive.

Clarification

Apropos a news item published in Dawn on Oct 10 headlined ‘Abbasi ousts long-time aide in row over funds for LNG’, the Ministry of Energy has clarified that Mr Shahidul Islam was not removed, but his contract expired on Sept 24, 2017.

Published in Dawn, October 10th, 2017