Amended E&P policy 2012: CCI decision cannot be re-written: Dar

ISLAMABAD: Deputy Prime Minister Senator Ishaq Dar here on Monday gave a clear message to the petroleum division (PD) that the approval of amended exploration and production policy by the CCI, under which E&P companies will be allowed to sell 35 percent of the gas from latest discoveries, cannot be re-written.

The Deputy Prime Minister stated this while presiding over the second meeting of the 20-member task force meeting on gas-related issues held in the Foreign Office. Dar wasted no time at all and asked the relevant authorities to make the Implementation Framework for approval by ECNEC (Executive Committee of National Economic Council) in two weeks as per the spirit of the CCI decision with the leading role of private sector firms in purchasing and selling in the gas sector.

The Petroleum Division did not submit the Implementation Framework as in the first meeting of the task force held on August 17, 2024. “If the Petroleum Division this time again fails to do its job, then the task force would take decision implementation framework on its own,” Dar warned. He, however, said the petroleum division can go for minor changes in the implementation framework only with consensus with representatives of the E&P companies ensuring the spirit of the CCI decision is not compromised at all. He admitted that the private sector’s role cannot be denied and without increasing its role, the gas sector cannot perform well.

He also asked Ahsan Iqbal, Federal Minister of Planning Commission and Special Initiatives to ensure the approval of the Implementation Framework in the next 15 days to ensure the smooth implementation of the amended E&P policy paving the way for $5 billion investment in the oil and gas sector.

Chairman of (Pakistan Petroleum Exploration and Production Association) PPEPCA, Ali Taha Al Tehmimi, who is also the country director of Kuwait Petroleum spoke on the approved amended E&P policy 2012, saying the amended E&P Policy 2012 must be implemented in letter and spirit as per the CCI decision for more investment in the oil and gas sector.

The task force headed by Dar also discussed the option to enforce the gas pricing formula on a quarterly-basis instead of the existing bin-annual basis arguing that the new mechanism would help halt further build-up in the gas circular debt which has risen to Rs2700 billion as of March 2024.

The chair of the task force asked the Petroleum Division to hire a consultant to work on this new gas price determination mechanism based on three-month basis to know if it helps the government to rein in the increasing gas circular debt or not. Dar said new gas determination mechanics based on a quarterly-basis should be effective from June 2025.

On the new proposal, the OGRA chairman argued that it may impact the petroleum concession agreements (PCAs), which are based on bi-annual gas price determination formula. However, Dar responded that the contracts would not be affected as the Dollar value would be the same as per the E&P policies. It was also decided in the meeting to allow more supply of 50mmcfd gas to K-Electric which is already consuming 100 mmcfd gas on average for power generation.

The Deputy Prime Minister also took strong cognizance of increasing line pack in the main gas pipeline putting the whole national gas transmission system in jeopardy and asked why the RLNG is not being utilized and why Sui Northern has placed the cut of 440 mmcf gas from the local gas fields. The Deputy Managing Director of the Sui Northern said that the power sector has reduced the consumption of the RLNG for power generation to 164mmcf against its demand of 600 mmcf which is why the Sui Northern had to decrease the gas outflows by 440 mmcf from local gas fields. The chair of the task force showed dismay over the decreasing demand for the RLNG in the country.

Iqbal Z Ahmed, a well-known businessman in LNG sector, told the meeting there still exists a need for RLNG in the country and suggested the government give two RLNG power plants — one at Balloki and the second at Haveli Bahadur Shah — to the private sector on lease for 10 years after competitive bidding. “The government has failed to operate the four RLNG-based power plants which are almost non-operational now as they do not meet the dispatch criteria,” Ahmed said.

The minister for power division and other task force members would respond to the Iqbal Z Ahmad’s proposal in the next meeting. Ghyias Paracha, the CEO a gas distribution company, highlighted the commercial aspects of amended E&P policy and said the private sector should be given the leading role — from purchasing local gas to selling it to the bulk consumers, through auction or bidding process. Dar said that the government is considering giving an enhanced role to the private sector in the oil and gas sector.