Islamabad: Prime Minister Shehbaz Sharif has directed the Petroleum Division to recover an outstanding royalty amount of Rs1.13 billion from two oil and gas firms (M/s SPUD and M/s FHL).

The Prime Minister’s Office, in a letter to the Secretary Petroleum Division, said: “it has been desired that the Petroleum Division shall ensure recovery of the outstanding amount within two weeks and submit a compliance report.”

On finding a complaint against M/s SPUD Energy and M/s Frontier Holding Companies for willfully defaulting of their obligations to pay outstanding royalty 12.5 per cent amounting to approximately Rs1.13 billion on the sale of natural gas/crude oil from Reti Maru, Badin IV South Block, and Zarghun field, PMO has taken action and sought recovery and submission of a compliance report from the Petroleum Division.

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Petroleum Division’s Financial Analyst Fazal Abbas, in a letter dated 27th January 2023 to Managing Director (MD), Sui Southern Gas Company Limited (SSGCL), advised to stop the payments of M/s SPUD and M/s Frontier Holding and deposit all the outstanding royalty at the rate of 12.5percent in the government treasury under the head of Account C-03906, within the timeline provided by the Prime Minister’s Office.

Total default on royalty payments on the part of M/s Spud Energy up to December 2022 stands at nearly Rs1,117,708,404 (Zarghun South Rs 1,094,311,112 and Guddu Rs23,397,292) while total default on the part of M/s FHL stands at Rs297,885,624 (Badin IV South Rs216,315,972).

The Petroleum division had sent two letters dated 17th February 2022 and 13th June 2022 to the SSGCL and advised to withhold the entire payment to the royalty defaulter, ie, M/s SPUD Energy and M/s FHL of its share in the gas produced from the Bolan, Badin IV South Blocks and deposit all outstanding royalty in the government treasury immediately.

In a letter dated December 16, 2022, Transparency International Pakistan (TIP) had earlier requested the PM to kindly look into this matter, and if it is found to be correct, then direct the regulator to first recover the outstanding amount from M/s Spud Energy and M/s Frontier Holding Companies prior to proceeding further assigning of 35 percent working interests in the Hanna Block from Mari Petroleum Company (MPCL) to Spud Energy Private Limited (SEPL).

Copyright Business Recorder, 2023