Power Division under NAB radar for delay in gas supply from Badin

ISLAMABAD: The National Accountability Bureau (NAB) has swung into action and initiated an inquiry into the colossal loss to the national exchequer on account of the hurdles in connecting gas supply from Badin-IV South Gas Fields to the national transmission system and to this effect the anti-corruption body has asked the Petroleum Division to provide all the official documents pertaining to the said Badin’s gas well.

The Badin-IV South Gas Fields has factually three gas discoveries — Ayesha, Ayesha North and Aminah. The fields have been completely developed and ready to produce and inject 30 mmcfd of high quality gas into the SSGCL system since June 2019, but the only pending matter remains the approval of Marginal Price incentive for Badin Fields by DGPC in accordance with the Marginal or Stranded Gas Fields Gas Pricing Criteria and Guidelines 2013.

The NAB in its letter written to the Petroleum Division on January 16, 2020 asked for the provision of complete details of Badin IV South Gas Fields in Sindh from the date of award till to-date. According to the copy of the letter available with The News, the anti-graft body also asked for the complete correspondence on the said gas fields along with noting portion including noting of secretary petroleum to-date. NAB also sought answers with documents of the question: “Is Badin IV South Well included in national grid? If not, why?” It also sought the complete details of all other wells which are successful but could not be included in the national transmission system along with the reasons.

“Director General Petroleum Concessions (DGPC) for the last six months emerged as impediment in the way of connecting the gas with the national transmission system of the country, depriving the masses from cheaper gas which is available at $4 per MMBTU as against the imported RLNG being given to countrymen at over $10 per MMBTU. The inaction by DGPC over Marginal Price incentive allowed in 2013 guidelines has caused a colossal loss of $50 million to the national kitty, as the gas supply from the said gas fields was to to be connected to the national system six months ago but on this front, zero progress was observed,” reveal the documents available with The News.

Interestingly, DGPC Imran Ahmad has rejected the report of the company IPR International Limited Pakistan that he himself appointed to probe the issue. And more importantly, the exploration and production companies from Canada and Kuwait have invested massive amount of $60 million in the Badin-IV South Gas Fields. And on account of non-availability of 30 mmcfd gas, industrial, CNG sector faced zero supply gas in the ongoing gas crisis that gripped the country from the month of December.

However, documents further say that DGPC Imran Ahmad disallowed the gas supply connection to the national system in the wake of dispute of 25 cents per MMBTU. The Third Party in the light of gas pricing guidelines 2013 had advised the DGPC the price of gas from Badin-IV South Gas Field at $6.25 per MMBTU, saying the said fields are Marginal Gas Fields, but DGPC Imran Ahmad and his consultant have disputed the amount of 25 cents per MMBTU owing to which the gas supply to the national system was delayed.

It is pertinent to mention here the people of area from where the gas hydrocarbons are produced get employment, the province gets the royalty of 12.5 percent whereas the federal government manages the sales tax of 17 percent and in addition exploration and production company also pays corporate tax and if all taxes are deducted, the price of gas comes to $4 per MMBTU whereas the government is importing RLNG at the cost of $10 per MMBTU.

It was DGPC Imran Ahmad who assigned the IPR Internal Limited Pakistan and AGR Traces International to assess the gas price from the said field prior to inking the gas sales purchase agreement with the exploration and production companies. The IPR International Limited Pakistan in the report declared the fields as Marginal Gas Fields and proposed the price of the gas at $6.25 per MMBTU.

The DGPC rejected the report and asked the IPR International Energy Group to examine the fields. It also submitted its report saying the fields are marginal ones. The GDPC in his version said that on the findings of IPR and AGR Traces, third party PEL has also submitted its report and the decision about 25 cents per MMBTU will be made under the exploration and production policy 2012.

Spokesperson Ayub Chaudhry, Additional Secretary of Petroleum Division, when contacted, said that Sui Southern will connect the gas supply from Badin IV gas fields from February 1, 2020 and the issue of marginal price incentive will be dealt later on. However, he insisted that the decision will be made as per law and the government will not discourage investors in oil and gas sector by denying the incentives. To a question if NAB has started an inquiry into the issue, he said the Petroleum Division will cooperate with NAB and provide all kind of information.

The Petroleum Ministry says that Sui Southern has submitted its representation to Special Assistant to the Prime Minister on Petroleum who has decided that the company may commence gas production from the fields and pay all outstanding obligations (exceeding US$400,000) and then request for reconsideration in the matter. However, the E&P companies involved in Badin-IV gas discoveries want the issue of marginal price incentive should be resolved first.

The Petroleum Division insists that at present, there is no restriction or pending approval on part of DGPC required for development of field and therefore the company must develop the field without any further delay and start gas production to ease the increased gas load requirements in winter.

Related posts

Leave a Comment