ISLAMABAD: Except for two private companies, the quota for liquefied petroleum gas has been abolished by the Oil and Gas Development Company (OGDCL) for all entities over the past few years, the Public Accounts Committee (PAC) learnt on Wednesday.

One of the two companies is Capgas, a subsidiary of the Pakistan Oil Fields Ltd, and the other — WAK Gas — is being run by some former PPP senators and Inter-Services Intelligence’s ex-chief Gen Ahmed Shuja Pasha.

OGDCL managing director Zahid Mir informed a PAC meeting that in accordance with a policy made by the government in August 2007, his company started abolishing the quota system in a gradual manner.

Mr Mir was responding to an audit objection to the distribution of LPG under a quota system instead of selling it through open competition.

He said the OGDCL had been distributing 360 metric tonnes (MT) of LPG by quota until 2007 when it started the allocation through open bidding.

One company has ISI’s former director general Shuja Pasha as its group chief adviser

He said the quota system had almost been revoked as 330MT of LPG is now being sold through open bidding, adding that since WAK Gas and Capgas went into litigation and obtained a stay order in their favour they continued to get the LPG under the old system because the court had directed the authorities concerned to preserve their quota till further orders.

According to the OGDCL’s record, the lion’s share of Adhi field — the only LPG reservoir managed by the OGDCL — was allocated to WAK Gas.

The company owned by former senators Gulzar Ahmed Khan, Waqar Ahmed Khan and Ammar Ahmed Khan was given 50 per cent of the LPG quota in 1988. After his retirement in 2012, Gen Pasha joined WAK Gas as its group chief adviser. The company’s website provides a brief introduction of Gen Pasha on its management page.

The remaining 50pc quota from the Adhi filed was equally divided between Capgas and Sun Gas.

The OGDCL record shows that the LPG quota was allocated to WAK Gas during the PPP government in 1988 when Jehangir Badar was the minister for petroleum and natural resources. After the term of the quota had expired, these companies obtained a stay order from a high court.

Mr Mir told the meeting that an extraction plant of OGDCL would become operational in a few days to enable it to supply the LPG to the Sui Southern Gas Company Limited (SSGCL).

The SSGCL has been procuring the LPG from the JJVL, but last month the former issued a notice to the JJVL for termination of the contract. The JJVL approached the Sindh High Court and obtained a stay order against the contract termination notice.

Price determination

About the LPG price, Mr Mir said that the OGDCL could fix the producer price but determination of the consumer price was not its prerogative.

The PAC asked Arshad Mirza, the secretary of petroleum and natural resources, to keep a check on the pricing of LPG in the market. Mr Mirza said that the ministry had drafted an LPG policy and asked the Oil and Gas Regulatory Authority (Ogra) to fix the price for consumers.

The audit authorities had pointed out that although the producer price in June was Rs50 per kilogram, it was being sold at Rs95 per kg.

The secretary assured the PAC that the matter would be taken up with Ogra.

The meeting was informed that the government had in 1999 issued licences for oil exploration in 40 blocks but the companies involved did not launch any such activity.

According to the audit report, “the monitoring authority i.e. director general, petroleum concession, neither investigated the matter nor cancelled their licences. This resulted in non-granting of licences to some other willing exploration companies to overcome energy crisis”.

In response, the secretary said that when the ministry had initiated the process to revoke the licences, the companies challenged its action in courts and obtained a stay order.

He said that the petroleum ministry was pursuing the matter in the courts.

Published in Dawn, August 18th, 2016