National Assembly Standing Committee on Petroleum on Wednesday advised the Petroleum Ministry to make its implementation mechanism more effective instead of opting for a new petroleum policy every two years which also affects new investment in the oil and gas exploration and production.
Committee meeting
The meeting of the committee was held under the chairmanship of Sardar Talib Hassan Nakai which discussed new Petroleum Policy 2011 and other oil and gas sector issues. Petroleum Minister Dr Asim Hussain explained to the committee that the Mashal project for LNG imports was dropped considering the expensive cost to the domestic consumers. The project was for supply of imported LNG to domestic consumers. However, the new LNG policy caters to the demands of the industrial sector which could pay the expensive costs. Briefing the committee on the new Petroleum Policy 2011, Director General Petroleum Concessions Sher Khan said the country was faced with a severe energy shortfall and new incentives were required to expedite exploration activities. He said the policy draft has been sent to provinces for comments and will be present before the Council of Common Interests for approval.
New proposed policy
Under the new proposed policy, he said the new blocks will be awarded in a transparent manner based upon international competitive bidding procedure. He said the new policy abolishes previous system of zones and offers a price of $6 per mmBTU for new discoveries instead of bracket rates of $4.38 to $5.03 mmBTU offered in 2009 policy. He said shallow discovery will be offered price of $7 mmBTU, deep $8 mmBTU and ultra deep $9 mmBTU. To promote off-shore exploration, a bonanza of $1 per mmBTU will be given for first three discoveries. He said the new gas price will be extended to existing leases provided they enhance their production by 20 per cent over and above their approved commitment plan by the government.
Terming the new petroleum policy similar to the old ones, Chaudhary Barjees Tahir of PML-N advised the ministry to remove bottlenecks in the policy by making implementation more effective as no petroleum policy has achieved its targets. He said the government claims Oil and Gas Regulatory Authority (OGRA) is fully independent but its determination to decrease petrol prices by Rs4 per liter was tampered by the ministry of finance which allowed only a reduction of Rs1.50 per litre.
Pettroleum levy
Petroleum minister explained that the parliament has given powers to the government to impose petroleum levy at Rs10 per litre on petroleum products. He said the finance ministry has not passed on the full impact as it might have retained the remaining under petroleum levy. Chairman Talib Nakai complained that the committee unanimously passed a resolution during the last meeting recommending to the Prime Minister to shift OGRA under the administrative control of the petroleum ministry but it was turned down. The committee decided to call on the PM to protest against non-implementation of their recommendation.
White elephant?
A heated exchange took place between the acting Chairman OGRA Sabir Hussain and members who termed the entity a white elephant and most corrupt department. Hussain claimed that the body consisted of professionals who were doing their work honestly and allegations of corruption were baseless. Syed Haider Ali Shah of ANP said that the Supreme Court of Pakistan has held the degree of the former Chairman OGRA fake, how could he say the allegations of corruption and inefficiency were baseless. Dr Donya Aziz of PML-Q advised that the bureaucrats should not make tall claims of their honesty and efficiency as they were paid handsomely for their work and integrity by the state. Shahnaz Sheikh of PML-Q brought the attention of the committee that some influential persons were getting uninterrupted gas supplies even though there was gas load shedding. Mentioning foreign minister Hina Rabbani Khar by name, she said her unit was getting uninterrupted gas supply. She said the matter was raised with the managing director of Sui Northern Gas Pipelines Limited, who said he was helpless as his wings will burn if he took action. Petroleum Minister assured that he would personally look in the matter and give a report to the committee. The committee decided to adjourn its proceedings as the members demanded calling ministry of finance officials to know the mechanism for determining the petroleum levy and cabinet decretary Nargis Sethi to know why OGRA could not be transferred under the administrative control of the petroleum ministry.
