The ministry of Petroleum (MoP) has sent Dewan Petroleum Limited's (DPL) case for gas procurement to Attorney General of Pakistan for legal opinion. The correspondence between Director Gas, Zaheer Alam, and Director General Gas, Saeed Ullah Shah, of the ministry of Petroleum indicates how bureaucrats cause delays if they do not want to decide it.
Sources said Saeedullah Shah and his subordinate Zaheer Alam spent a few months on official noting contradicting each other in M/s DPL case. They raised many legal points in their correspondence. This resulted in sending the matter to Attorney General for legal comments. Whatever opinion comes from the Attorney General's office, one thing is evident that tussle between two offices of the ministry is going to delay a contract for singing of gas procurement from M/s DPL's field.
This is not the only case many foreign E&P companies have already approached the petroleum secretary against Director General Gas and Director Gas working. They alleged them of delaying gas procurement and supply to the distribution system. A MoP letter to Attorney General said that Ms DPL's case for gas pricing from Susibil field has been rejected. This was followed by referring the matter to Attorney General and his opinion would be final to decide it once for all.
The letter said "M/s Dewan Petroleum Limited's (DPL) request to allow provisional gas price for Salsabil field located in Safed Koh block was disputed between the government and M/s DPL on interpretation of pricing provisions of Petroleum Policy, 2001".
It added "As per advice of the Prime Minister, the case has been referred to Attorney General for opinion, which is still awaited. Meanwhile, it was agreed that the issue of gas prices would be given second look from the policy standpoint since the policy in under review. Provisional draft makes the issue of gas price contingent upon the opinion of Attorney General.
According to the ministry, M/s DPL had made similar requests in the past also but they were not entertained on wider policy implications. It was assumed that other companies will follow the same course, which will create large liability for the government as more than 100 petroleum concession agreements based on similar pricing provision have been executed by DGPC".
Given wide difference between M/s DPL's interpretation of the pricing provisions and PCA and the government's interpretation. The government view as presented to the Attorney General is specifically based on two major arguments, which inter-alia are (a) acceptance and allocation of gas by the government; and (b) the working of gas price mechanism and If the ministry proceeds in the matter provisionally as proposed by M/s DPL, its argument related to acceptance and allocation of gas will be compromised.
Therefore, there is a need to settle the issue of gas acceptance and allocation as well as the price even before start buying gas from M/s DPL provisionally.
THIS ARGUMENT REGARDING ACCEPTANCE AND ALLOCATION OF GAS BY THE GOVERNMENT IS BASED ON THE FOLLOWING:
PROVISIONS OF THE POLICY:
(i) As per Section 2.6.6(vi) of the policy and article 10.2(d) of PCA, before taking a decision to buy the natural gas from M/s DPL, there is a requirement for the government to ascertain whether the natural gas being offered is an "acceptable pipeline specification gas" and such gas is "in acceptable daily, monthly and yearly volumes" to meet the "internal demand" in an "economical manner".
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