Concerns raised over gas sale deal without bidding

ISLAMABAD: MOL Pakistan, an operator and 10 per cent shareholder in Tal Block, Kohat, has finalised the sale of gas from the newly developed Razgir field, which is 65pc owned by the state-owned entities (SOEs), to the first privately owned gas firm — Universal Gas Distribution Company Ltd (UGDCL).

This enables the Islamabad-based UGDCL to acquire about 50 million cubic feet per day (mmcfd) gas for its private customers, mostly CNG stations, to be sold through a pipeline network of Sui Northern Gas Pipelines Le (SNGPL) on payment of wheeling charges.

The transaction, still to be finally signed, has aggrieved other private gas distribution companies who claim the natural resource, overwhelmingly owned by the SOEs, could not be legally sold to a third party without competitive bidding. They alleged that SOE managements, under the influence of higher-ups, were facilitating the transaction instead of seeking competitive bidding for higher revenues to the government and better returns to shareholders. They also went against the 2023 Economic Coordination Committee (ECC) decision that required a bidding process.

The field operator MOL has sought through Joint Venture Partners — Pakistan Petroleum Ltd (PPL), Oil and Gas Development Company Ltd (OGDCL) having about 30pc share each and Government Holdings (Pvt) Ltd (GHPL) with 5pc stakes — consent for the signing of gas sale purchase agreement with UGDCL, according to documents seen by Dawn.

Another private joint venture partner — Pakistan Oilfields Ltd (POL) with a 25pc stake — has raised questions over the lack of transparency in the transaction process. It complained in writing to all partners that it was unfair to have been kept in the dark over the negotiations or the concluded terms and learned only through outside sources despite being one of the top three majority shareholders. It demanded a “competitive bidding process” be followed for the sale of gas from Razgir field before finalising the buyer and the price for the gas “to avoid any potential complications”.

None of the public sector stakeholders to the sale — Petroleum Division including Minister Musadik Malik, Secretary Momin Agha and managing directors of OGDCL, PPL and GHPL — responded to Dawn’s calls and written questions.

MOL’s Regional Vice President Ali Murtaza Abbas also did not respond to requests for comments. Sec­retary Petroleum, the principal accounting officer of the Petroleum Division, indirectly conveyed that only SOEs’ managements were answerable to such questions given their independence under the SOE Law.

Ghias Abdullah Paracha, the chief executive officer of the UGDCL, confirmed to Dawn that the Razgir gas transaction was in process and chances were very strong that it would be executed soon.

He said five or six other companies who had acquired gas distribution licences from the Oil and Gas Regu­latory Authority (Ogra) had been sitting idle because they had other businesses but UGDCL shareholders — mostly CNG stations — had lost their past business and struggled for survival at very low margins. He said UGDCL already had signed an agreement with MOL in March 2023 for 15mmcfd gas from Mamikhel field to keep the business rolling under which “we were bound to purchase gas in future as well. This transaction is progressing under the same agreement”.

He alleged that some new players were trying only to spoil the market and had no experience in gas sales.

Published in Dawn, January 2nd, 2025