Ministry of Energy's Petroleum Division is to hold further deliberations with all the stakeholders on proposed extension in a lease contract of Saindak Copper-Gold Project with Metallurgical Corporation of China Limited (MCC) China after the federal Cabinet allowed withdrawal of summary, well-informed sources told Business Recorder.
The Petroleum Division apprised the cabinet headed by Prime Minister Shahid Khaqan Abbasi, who has kept the portfolio of Energy, that Saindak Cooper-Gold Project (SCGP), Balochistan, was producing blister copper from indigenous ore of Saindak area, District Chaghai. It was Government of Pakistan's (GoP) venture managed by Saindak Metals Limited (SML) (100 percent GoP owned entity under Petroleum Division). In pursuance of the Cabinet's decision of May 9, 2001, the project operation was leased out to MCC - a state-owned entity of China for a period of 10 years with effect from October 2, 2012. The GoP's Aghaz-e-Haqooq-e-Balochistan Package (AHBP) envisaged the transfer of SCGP ownership to the provincial government after completion of its lease term. The lease period was extended up to October 2017 with the consent of Government of Balochistan (GoB) and approval of the cabinet, through an addendum to the lease contract.
On a summary submitted by the Ministry regarding transfer of the project to GoB under AHBP in furtherance of a GoB's request, the Prime Minister's office advised that the matter be placed before the Cabinet. Meanwhile, the GoB consented to the continuance of existing arrangements for project operation beyond October, 2017 and extension of the lease contract term between SML and MCC for this purpose. The Prime Minister's office was accordingly informed that the matter was being processed for extension of lease contract and the terms and conditions finalized in this regard would be submitted for Cabinet's approval.
The Cabinet was apprised that the mineral deposit found in the project area comprises three ore-bodies: east, north and south. The ore deposit in current mine south ore-body is almost exhausted and other ore bodies need to be developed for future operations. The project continuity beyond October, 2017 is of paramount importance for socio-economic considerations for the people of this far-flung area. The project is providing livelihood to thousands of local residents besides making a substantial contribution to provincial and federal exchequers and community development.
MCC, SML, GoP & GoB have reached an understanding on development of North Ore-Body (NOB). As per MCC's assessment, development of NOB is uneconomical at currently depressed metal prices and the company sought subsidies in the shape of a reduction in the royalty rate and waiver of the project rent. However, after detailed deliberations, MCC agreed to continue project operations for the next five years on the existing rate of royalty and other terms and conditions, as enunciated in the lease contract. GoB has consented to the extension of the lease contract between SML & MCC and the proposed addendum has also been vetted/cleared by the Law & Justice Division.
Federal Cabinet was further apprised that Finance Division has endorsed extension of lease period and mentioned that no financial obligation will be put on GoP during the current as well as extended period of the lease. A confirmation regarding observance of the conditions proposed by Finance Division has been obtained from SML & MCC and these conditions have accordingly been incorporated in the addendum. Ministry of Industries & Production has also acquiesced to the extension of EPZ status of the project.
Petroleum Division requested federal cabinet to consider the proposed five-year extension in the lease contract period of Saindak Copper-Gold project with MCC, China beyond October 31, 2017 and approve addendum to the lease contract to be signed in this regard by SML Management with the said lessee company.
However, the cabinet did not approve the proposal, after the Petroleum Division indicated that it was withdrawing the summary with the direction to hold further negotiations with all the stakeholders. Prime Minister Abbasi as Minister incharge Energy Ministry had seen and allowed the Petroleum Division to submit the summary to the cabinet for consideration.
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