Having lost over $800 million, $1.5 million per day, the state-owned largest exploration and production company, Oil and Gas Development Company Limited (OGDCL), is considering an out-of-court settlement with a private sector company, which is engaged in litigation with it in different courts including Supreme Court and high courts.
As many as 16 cases have been filed by Petrosin, a Singapore-based company owned by Pakistani national Sohail Latif, and another person, against the OGDCL in various courts including Supreme Court.
According to the draft minutes of the 111th special meeting of the OGDCL Board of Directors held on November 19 in Islamabad, which is available with Business Recorder, Managing Director of the company Zahid Hussain had stated that the losses were on the account of delays in the Kunnar Pasakhi Deep, Tando Allah Yar, Sinjhoro and Qadirpur projects, which were expected to produce 7,000 barrels of oil per day and 300 mmcfd of natural gas.
"As many as 16 cases filed by Petrosin and Zafar Mehmood Malik against OGDCL were pending in different courts including the Supreme Court, Sindh High Court, Lahore High Court, Peshawar High Court and District Court, Islamabad," he further stated.
The litigation has been initiated "directly and indirectly" by Petrosin, a Singapore-based company owned by Pakistani national Sohail Latif, and Zafar Mehmood Malik, who "claimed" to be a shareholder in the OGDCL. Both the petitioners are being represented by Abdul Hafeez Pirzada, while OGDCL is being represented by Shahid Hamid, Khaliq-uz-Zaman and Sardar Qasim Farooq.
In the meeting, one of the OGDCL''s lawyers, Shahid Hamid, stated that both the "co-petitioners" were "acting in unison with each other" and had filed the cases in different courts "with the evident purpose that if they could not obtain relief from one court then they had the chances of getting relief from another. "The idea/intent is to engage (OGDCL) on various front and try to paralyse its operations," the minutes quoted Hamid as having said during the meeting.
The meeting was called to discuss the offer of the petitioners to withdraw all the cases against OGDCL provided the OGDCL not treat Petrosin as a chronic litigant and allow it to participate in OGDCL''s pending and future tenders, and it (Petrosin) be treated as a "technically pre-qualified" party in the previous tenders that have already been re-tendered.
The OGDCL MD had informed the Board members that the Federal Minister for Petroleum and Natural Resources was of the view that " settlement would be in the interest of OGDCL and the MPNR provided all the cases against the Ministry and the Federation of Pakistan were also withdrawn."
A participant of the board meeting told Business Recorder on condition of anonymity that the losses to the national exchequer on account of higher fuel import bill as well as losses due to closure of the industries because of supply interruptions, took the real cost of such litigation against OGDCL into "billions of dollars."
He said both the state-owned company and Pakistan itself were being "held hostage" by one private sector party. The Board unanimously rejected the proposal to accept Petrosin as a technically pre-qualified party, as this "could cause problems/litigations with other bidders" and decided that Petrosin would have to "go through the process of pre-qualification on a case-to-case basis," the minutes revealed. It said the Board reached the conclusion that Petrosin''s "previous pre-qualification cannot hold good now" and that "in any case, it would not be fair, just or equitable to give them special consideration vis-a-vis other potential bidders."
The Board resolved that if Petrosin and Malik withdraw all the cases and undertake not to initiate any litigation in future, then the Petrosin may be allowed to participate in future bids and tenders if it meets the financial and technical pre-requisites. It stated that though the disqualification would apply for as long as any potential bidder was in litigation with OGDCL and in respect of the bidders whose past conduct in the execution of work was adjudged by OGDCL to have been poor.