CCI-approved amended E&P Policy 2012 can’t be reversed: Dar

ISLAMABAD: Deputy Prime Minister Senator Ishaq Dar told a meeting here that the decision by the Council of Common Interests (CCI) on the amended Exploration and Production (E&P) Policy-2012 could not be reversed. Under the amended policy, exploration and production companies were allowed to sell 35 per cent gas to private sector parties from future oil and gas discoveries, and any implementation framework which could beat the spirit of the policy could not be approved.

Chairing the first meeting of 20-member committee, Dar asked the stakeholders, including exploration and production (E&P) companies and top officials of the Petroleum Division, to put their heads together to work out in two weeks consensus recommendations for an implementation framework and bring it to the forum for approval, so that it could be sent to Executive Committee of the National Economic Council (ECNEC) for formal approval and making the policy operational.

He asked the maritime ministry to come up with a report in a month to explain why the Port Qasim Authority (PQA) was charging the highest charges in the world from the LNG carriers, which were passed on to the RLNG end consumers.

On the issue of circular debt in the gas sector that increased to Rs2,700 billion till March 2024, the finance ministry, petroleum and power divisions were asked to start from the point where the last caretaker regime left work on erasing the circular debt in gas sector. The caretaker regime had worked out many proposals to resolve the issue. The three ministries were tasked to furnish the way forward in four weeks to end the gas circular debt.

On the demand of E&P companies for CPEC-like security for smooth oil and gas production activities, the interior ministry was asked to present a doable plan in the next meeting of the committee. The meeting took up an 11-point agenda and deliberated in detail every issue related to the gas sector, senior officials at the Energy Ministry told The News.

It was decided in the meeting that the Power Division would be taken on board on every issue of the Petroleum Division. The meeting was informed that the CCI, on January 26, 2024, had approved the amended E&P policy, allowing the E&P companies to sell 35pc gas from the new discoveries, and it had asked the Petroleum Division to submit an implementation framework to ECNEC. However, after seven months, the Petroleum Division failed to submit the timeframe to ECNEC for approval. The Petroleum Division prepared a 15-point implementation framework, which negated the spirit of the CCI decision. It could seriously discourage investors and damage their confidence in the policy regime of the country. The Petroleum Division said it wanted to implement the amended E&P policy in seven years in phases.

The E&P companies stressed the implementation framework as per the spirit of the CCI decision. They wanted implementation of the amended policy in one go, not in seven years, as suggested by the Petroleum Division. Ishaq Dar, however, said in the meeting that the CCI decision could not be reversed and any implementation framework that would beat the spirit of the policy could not be approved. The deputy PM directed the E&P companies and Petroleum Division officials to furnish consensus recommendations in two weeks, said one of the participants in meeting. Federal Minister Musadik Malik kept on stressing level playing field for Sui Gas companies, while agreeing in principle to de-regulation of gas sector and import of RLNG.

The private sector representatives prevailed in the meeting. Eminent LNG businessman Iqbal Z Ahmad pointed out that the RLNG cost was 40pc higher and it could be reduced by rationalising the port charges, taxes and margins. He said the private sector was not being allowed to import RLNG, though there was an LNG glut in the international market and the prices were down currently. When the issue of less demand of RLNG in the country was raised, he said the demand was very much there, but Sui companies were unable to sell gas. “Since Sui companies are not interested in marketing the imported gas as they prefer to rely on the 17pc profit on assets, therefore, they divert the costly gas to domestic sector, creating loss in recovery which appears in the shape of circular debt,” he explained. According to official sources, he argued if the private sector was allowed to import RLNG, they would not only sell imported product at a reasonable price but also ensure 100pc consumption of RLNG in the country. Iqbal Z Ahmad stressed that the import of LNG and gas sector should be deregulated, to which almost all participants agreed in principle.