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ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Thursday approved a Rs31 billion supplementary grant to the defence ministry and cleared an out-of-court settlement with three “non-performing and defaulter” oil and gas companies over 11 exploration and concession blocks to push for new domestic hydrocarbon finds.
In a meeting presided over by Finance Minister Ishaq Dar, the committee also approved payment of monthly salaries to the remaining employees of the defunct Pakistan Steel Mills (PSM) throughout the year and allowed the transfer of the working interest of Eni — an Italian multinational energy company — in Pakistan to a little-known firm on the guarantee of Hubco.
An official statement said the ECC approved technical supplementary grants of Rs30.89bn in favour of the defence division for unspecified expenses and Rs1bn for the Ministry of Housing and Works.
The meeting also approved a summary of the petroleum division to revive petroleum exploration blocks that were revoked by the division because of “non-performance of work commitment and non-payment of financial obligations” of the three local companies — Dewan Petroleum, Petroleum Exploration Limited (PEL) and Oil and Gas Investment Limited (OGIL).
The government earlier terminated licences to Dewan and PEL on five exploration blocks each and another of OGIL for default in terms of non-completion of their committed exploration activities and non-payment of rental and other dues. The companies, however, secured stay orders from various courts.
The petroleum division told the ECC that in all the 11 blocks, status quo orders were passed by the respective civil courts and Islamabad and Sindh high courts. The litigants approached the government and showed interest in exploring the awarded blocks.
The petroleum division then claimed that the litigation timeframe was always unpredictable and even if a case was decided at one forum, a higher forum was available up to the Supreme Court until a final decision was reached.
“Hence, litigations over these revoked blocks may be long drawn and it can take substantial time to conclude,” it said, arguing that this would not only result in depriving the exploration and production (E&P) sector of investing in these areas but also deprive the country of benefits from the expected local oil and gas discoveries and reserves.
Such discoveries could contribute towards minimising the energy deficit of the country and thus save foreign exchange. Therefore, the petroleum division said it had developed a framework to revive revoked licences through an out-of-court settlement. The ECC approved the proposed framework.
The ECC also approved a summary for amendments to the Import Policy Order 2022 to allow the import of the Holy Quran subject to a no-objection (NOC) certificate from the relevant federal or provincial authority as required by Lahore and Balochistan high courts to ensure error-free printing, publishing, recording and import of Quran.
The meeting also approved another summary of the commerce ministry seeking an amendment to an ECC’s earlier decision made on July 25 for correcting records, minutes and notification to apply regionally competitive rates of electricity and gas for export sectors. Under the corrections, the rate is Rs19.99 per unit of electricity with effect from Aug 1 and $9 per unit of regasified liquefied natural gas with effect from July 1.
The ECC also allowed the grant of the development and production lease to the Pakistan Petroleum Limited (PPL) for 15 years with effect from Jan 15, 2022 over the Kandhkot mining lease area on existing gas price and subject to the condition that the PPL would pay all the financial obligations under the Petroleum Policy 2012.
The Kandhkot discovery was made by PPL in 1959. The government granted the mining lease over the Kandhkot gas field for a period of 30 years in 1962, which was renewed for another 30 years in 1992.
The ECC also approved a change of effective control from Eni ULX Limited, Eni UK Limited and Eni Oil Holdings B.V. in respect of its subsidiary companies — Eni Pakistan Limited, Eni Pakistan (AEP) Limited and Eni Pakistan (M) Limited, respectively — to the Prime International Oil and Gas Company Limited (PIOGCL).
The approval is subject to the condition that the PIOGCL shall be liable to the government for all the minimum work commitments and financial obligations and the government’s revenue would not be adversely affected after this change of effective control.
It was reported that Hubco would own the PIOGCL with a 50 per cent share in Eni’s working interests in Pakistan while the remaining half of shareholding would be owned by Eni’s employee buyout (EBO) group.
It was reported that the former employees of the outgoing multinational had the technical strength and, with Hubco’s financial support, would be well suited to run the operations. Hubco agreed to provide the guarantee for fiscal obligations.
The ECC also approved a 25.6pc increase in the maximum retail price of paracetamol plain and extra (both 500mg) tablets to Rs2.35 and Rs2.75 apiece, respectively, and 12pc increase in liquid paracetamol price to Rs117.6 per bottle.
The finance minister committed the price hike with the pharmaceutical industry on Wednesday.
Published in Dawn, October 28th, 2022
