Senate panel rejects PMDC privatisation

ISLAMABAD: The Senate Standing Committee on Petroleum and Natural Resources Tuesday unanimously rejected the government’s proposal to privatize the Pakistan Mineral Development Corporation (PMDC).

Citing concerns, the committee said the Balochistan government was not consulted, despite owning the coal and salt mines leased to the federal government.

“The provincial government granted these leases, and now you are arbitrarily privatizing them, selling to private parties without consulting the real owner — Balochistan,” senators argued during the meeting chaired by Senator Umer Farooq.

The committee members argued that the move threatened thousands of jobs and could harm the financial health of the corporation. They were unanimous in their opposition. “We are against its privatization. We will use our authority to stop it,” the committee said.

Momin Agha, Secretary Petroleum Division, clarified that the government was not privatizing the provincial resources but rather the PMDC as a corporate entity. However, this explanation did little to alleviate the committee’s concerns.

Senator Sadia Abbasi pointed to the past failed privatization efforts, such as the case of Pakistan Telecommunication Company Limited (PTCL), warning that similar outcomes could befall the PMDC. Abbasi further highlighted that Pakistan had $800 million tied up in financial issues, which was hampering national development.

Senator Manzoor Ahmed, who was specially invited to the meeting after raising concerns in the Senate regarding the Pakistan Mineral Development Corporation (PMDC) privatization, expressed alarm over potential job losses. He noted that the privatization could result in the elimination of 5,000 jobs. The Senate had referred the issue to the Standing Committee on Petroleum and Natural Resources for further review. “We must ask whether PMDC is operating at a loss,” he said, arguing that the company has been profitable and should focus on safeguarding local employees.

Secretary Agha confirmed that PMDC has been profitable for the past three years, placing it in the second tier for privatization. He reassured the committee that the rights of employees would be “100 percent protected” under the privatization plan. Additionally, he noted that the process is still in its preliminary stage, needing approval from the Cabinet Committee on State-Owned Enterprises (CCoSOEs) and the Cabinet Committee on Privatization (CCoP).

Committee members also raised concerns over PMDC’s outdated machinery and safety protocols. Secretary Agha acknowledged that 80 fatalities had occurred in PMDC-operated coal mines over the past five years, arguing that privatization could attract investment to modernize equipment and improve safety standards.

Senator Manzoor emphasized that the PMDC only holds leases on the land, not outright ownership, questioning the legal framework for privatizing an entity managing provincial resources. Senator Qurat-ul-Ain Marri questioned how the federal government could privatize land belonging to provinces without proper consultation.

Agha reiterated that only the corporate entity of PMDC would be privatized, not the land or the leases themselves. Further details, he added, would emerge after the appointment of a financial adviser.

The committee also discussed delays in gas supply project for Gulistan Tehsil in Qilla Abdullah, which has been stalled since its inauguration in May 2015. Senator Abdul Shakoor Khan criticized the exclusion of a 5-kilometer area from the project, which has impeded its completion.

The Director General of Gas reported that Rs500 million has been allocated for the project, which includes plans for a 22-kilometer gas pipeline. However, the project has faced delays due to a nationwide ban on new gas connections, which has been in place since 2021.

Secretary Agha explained that the restriction applies across Pakistan and called for a comprehensive policy review. Committee members urged the secretary to find a solution to expedite the project in the public interest.

Later, Petroleum Dealers Association called for an increase in the dealers’ margin, stating that the current margin stands at Rs8.64 per liter. The association pointed out that oil marketing companies deduct Rs1.40 from their margin. Banks deduct fees from fuel sales, with 80 paisa deducted for every Rs100 in sales.

“With the rise in prices, we deserve a corresponding increase as well,” the association said, urging the government to establish a formula that adjusts the margin in line with inflation.

“The laws from 1937 are still in effect, and it’s time for a change,” the association added, demanding that dealers be treated separately from oil marketing companies (OMCs).

The chairman of the Oil and Gas Regulatory Authority (Ogra) confirmed that the agency calculates costs and margins for Oil Marketing Companies (OMCs) and dealers but noted that credit card deductions fall under agreements between dealers and banks. The committee directed the Petroleum Dealers Association and OGRA to collaborate and resolve the issue. The dealers’ margin was set at Rs8.64 per litre last year, which included franchise fees.