The Supreme Court has ordered issuance of notices to six parties relating to grant and acceptance of exploration licences for gas in Rodho Block in Safed Koh area in Dera Ghazi Khan. The gas reserve is estimated approximately at four billion (later revised to 55 million) cubic feet with heating value of 1129 BTU. The orders were passed by the Second Bench on a petition invoking Article 184 (3) of the Constitution, and seeking enforcement of fundamental rights guaranteeing freedom of trade and business and equal opportunities.
The Bench is composed of Justice Iftikhar Muhammad Chaudhary, Justice Rana Bhagwandas and Justice Falak Sher. The petition was presented by Abid Hassan Manto on behalf of Syed Ihsanullah Waqas, a member of the Punjab Provincial Assembly, questioning the "manner in which an exploration licence" was granted to Scimitar Hydrocarbons of Pakistan Limited.
The petition said that gas in Rodho II, nearly 12 km from Sui Northern Gas Pipeline was found but its size was estimated below 15 billion cubic feet and hence was not considered commercially viable. It was therefore plugged and abandoned.
However, later estimates published in the Pakistan Energy Year Book of 2003, put the gas reserves six times higher and at the prevailing market price of the gas was estimated at Rs 6,699 million approximately.
The condensate reserve accompanying the gas, the petition argued, would "conservatively be estimated to be around 1.5 million barrels and at the US $: 21 per barrel was valued at $: 31.5 million.
Thus the value of public assets "surreptitiously allocated" calculated at one of the respondents' own showings came to approximately $: 147 million. The licence awarded was for slightly over half a million dollars.
The petitioners have said the manner in which the exploration rights were granted to the Scimitar were "highly dubious and covert" and that there was evidence that the bidder had advance information about the geophysical studies of the gas field that otherwise were not made public.
The respondents to petition are the Federal Government, Oil and Gas Development Company, the Scimitar Hydrocarbon, the MESA Petroleum Exploration, Rally Energy and Dewan Petroleum.
After the signing of the exploration deal, the major shareholder of Scimitar, Muslim Lakhani, sold his share to Rally Energy Pakistan Limited making his licence a subsidiary of the new company. The latter afterwards sold its interests for $7 million to Dewan Petroleum Limited.
Dealing with the validity of the licence, the petition says, it was initially for two years with one year's possible extension based on circumstances but it was extended for the third year even when no new well was drilled or existing ones re-entered.
On assuming the working interest, the new company "mobilised a rig and re-entered the previous discovery at Rodho II" and was deepening it. This, the petition said, was against the spirit of the licence that required for fresh explorations.
The inaction on the previous licensees and also the sale of the exploration permission, the petition pleaded, spoke of mala fides and illegality to benefit the first licensee and hence was liable to be struck down.
The grant of exploration rights to the first company, Manto said, was not transparent but surreptitious, "most doubtful", as correct information about the value and size of the gas reserves was not made public.
All these proceedings contravened Articles 9 to 18, 23 and 25 of the Constitution and hence, should be struck down and the licence re-auctioned through wider publicity about the size and value of the gas.
The office, while issuing notices that seek para-wise comments on the petition, will fix the date for the hearing.
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