ECNEC paves way for E&P firms to sell gas to private sector

ISLAMABAD: The Executive Committee of National Economic Council (ECNEC) has accorded endorsement to the Implementation Framework earlier approved by Deputy Prime Minister Ishaq Dar paving the way for implementation of amended Exploration and Production (E&P) Policy 2012, a senior official of the Petroleum Division confirmed to The News.

“We have received the written decision of ECNEC which has endorsed the implementation framework to make amended E&P policy 2012 effective. Now Petroleum Division will issue the notification of amended policy,” the official said.

The Council of Common Interests (CCI), during the caretaker regime, on January 29, 2024, approved the amended Exploration and Production Policy 2012, allowing the exploration and production companies to sell 35 percent of gas from future gas discoveries to the third party (private sector) at auctioned prices. Now the DGPC (Directorate General Petroleum Concessions) will issue a notification and the amended E&P policy 2012 will be enforced. This would pave the way for a $5 billion investment in oil and gas exploration and production as promised by the E&P companies to Prime Minister Shehbaz Sharif. This development will be brought to the notice of the executive committee (EC) of the SIFC (Special Investment Facilitation Council) meeting today (Wednesday). The SIFC will take up a very important agenda about the energy sector which includes i) CCI decision on amended E&P policy and its implementation status, ii) the upgradation of local refineries under brownfield refinery, iii) progress on JJVL (Jamshoro Joint Venture Limited) for LPG production plant in light with the decision of Joint Working Group of SIFC, iv) Mineral policy, harmonization in the legal and regulatory framework; v) Options available for 50 mmcfd gas to NSCL, and vi) Green refinery policy amendment for new refinery using used equipment to accommodate TransAsian (Flow) Refinery. On the upgradation of local refineries, the official said, SIFC will be informed that the Petroleum Division would recommend to the prime minister to resolve the issue of sales tax exemption. Earlier, the IMF mission rejected the government’s proposal and asked instead to increase the sales tax on POL products to 18pc. However, this has caught the government in a quandary as this will increase the price of petrol by Rs45 per litre. The central government can slash the Petroleum Levy by Rs45 per litre on POL products and impose a sales tax of Rs45 (18%) per litre. The government is currently charging Rs60 per litre as PL.