ISLAMABAD: The government has sacked the chairman and an independent member of the board of directors (BoD) of a state-owned entity executing $15 billion gas pipeline projects after they raised questions of economic feasibility, transparency and record tampering.

Informed sources told Dawn that Chairman Nawabzada Shahzad A. Khan and member Zubair Motiwala were unceremoniously removed by the ministry of petroleum from the nine-member board of the Interstate Gas Systems (Pvt) Ltd (ISGS) a day after they put on record in writing what they described as the fudging of proceedings and decisions of the board meetings regarding critical pipeline projects and budgets.

The size of the board was reduced through a notification to seven comprising officials of the ministry and its subordinate companies.

When asked if the two gentlemen were removed for raising questions over transparency and fudging of record of the board meetings, Petroleum Minister Shahid Khaqan Abbasi said: “Not that I know of.”

The ISGS only had an acting chairman for the last few meetings as the board was to be reconstituted due to the expiry of the term of several members, he added.

He declined to comment on issues of transparency and record tampering, saying the ISGS managing director should be contacted to seek comments on the issues.

Mr Khan alleged in a letter sent to the petroleum minister after his sacking that the ministry had “started exerting pressure on the decision making of the board of directors… and tried to manage and implement important decisions through the managing director without authorisation of the board”.

He said he had written the letter as a “whistle blower for the people at the helm of affairs to (ask them to) take appropriate action to restrain those responsible from plundering the state exchequer”.

He said that the structure of $4.7 billion gas pipeline projects — 850km Gwadar-Nawabshah and 710km Karachi-Lahore — had been designed on foreign loans against sovereign guarantees. It will mean the public will pay $20.3bn in the next 20 years though the gas supply will be only 600 million cubic feet per day — half of the promised 1200mmcfd.

He said that the Iran-Pakistan gas pipeline project inaugurated in early 2013 had been shelved by the ministry without knowledge or consent of the ISGS board. “It was reshaped into Gwadar-Nawabshah project without a technical and financial feasibility study. The consultant hired for the Iran-Pakistan project was also given works of a liquefied natural gas terminal and the Gwadar-Nawabshah pipeline without authorisation of the board and in violation of procurement rules as highlighted by independent lawyer Khalid Anwar.”

Mr Khan said that the project had been taken in hand in haste and without proper evaluation and without bidding.

He argued that in the absence of Iran-Pakistan project, there was no justification for the Gwadar-Nawabshah pipeline because a much cheaper option could have been available at Karachi. “The whole process apparently seems to be tainted”.

He said the North-South pipeline with a capital expenditure of $2.2bn promised $526 million annual charges on a “take or pay” basis and the public would end up paying $10.5bn in 20 years.

He said the cost of the gas pipelines ran into billions of dollars and required due diligence, technical evaluation, comparative cost analysis and competitive and transparent process of procurement needs.

He said that he had highlighted some of the deficiencies in the process and called a meeting of the board to discuss them. But instead of rectifying the deficiencies, the ministry moved with mala fide manner and without lawful authority changed the board in violation of the companies’ ordinance, public sector companies’ rules and the article of association of the company.

Earlier, Mr Khan reported on Aug 10 that he had found in the minutes of 100the meeting of the board “certain approvals... whereas in actual no such approval was granted”.

He said that it was not the first case of this kind as the company secretary had also tried to forge the minutes of the 99th meeting and showed approvals that had not been granted by the board. Same was the case with the minutes of the 84th board meeting, he added.

He alleged that some ISGS officials were working in two other government companies without approval of its human resource committee or BoD and drawing salaries and perks from three companies simultaneously. Also salaries of “certain staff members” were raised abnormally without approval from the board while critical posts were kept vacant to create justification for hefty payments of Rs2.5bn made to a consultancy firm that has not started ground work so far.

Mobin Saulat, Managing Director of the ISGS, said that tampering with the minutes of the board meetings was “impossible” because they were recorded, transcribed and then circulated to all board members. The minutes were finally approved by the board chairman once all members cleared them after corrections.

He said that the minutes of the 99th and 100th meetings of the board had not been approved yet and added that the board also discussed issues on government directives.

He said the reconstitution of the board was due now and the ministry had also changed boards of other public sector companies in recent months.

Mr Saulat said that he had had an association with Shahzad Khan over the past few years during which there had been no difference of opinion between them on Iran-Pakistan and Turkmenistan-Afghanistan-Pakistan-India pipelines or other pipelines and the projects had achieved many milestones with the approval of the board of directors. “Mr Khan did not raise any objection to the projects during the board meetings but perhaps he had some political differences with the ministry”, he said.

Published in Dawn, August 19th, 2016