Tug of war: ISGS a scapegoat in tussle between govt, opposition

Petroleum ministry claims no ISGS board member removed arbitrarily

ISLAMABAD: Inter State Gas Systems (ISGS), a state-run company set up to execute gas import projects, appears to have become a scapegoat in the tussle between the ruling Pakistan Muslim League-Nawaz (PML-N) and the opposition Pakistan Peoples Party (PPP), which may stop progress on projects of national importance.

The dispute erupted when ISGS board of directors chairman Nawabzada Shahzad Ali Khan was removed and he then wrote a letter to Petroleum and Natural Resources Minister Shahid Khaqan Abbasi alleging corruption in the North-South and Gwadar liquefied natural gas (LNG) pipeline projects initiated by the present government.

However, he did not talk about any mismanagement in the Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline projects, which were also signed during the tenure of current government.

According to officials, this was a political move against the PML-N by the PPP and ISGS was made a scapegoat.

Khan, son-in-law of PPP leader Mian Manzoor Ahmad Wattoo, was appointed a board member of ISGS during the previous PPP administration. Since then, he has taken part in all agreements on the IP and Tapi pipelines. During the rule of present government, he was made chairman of the board.

On Friday the PPP submitted a calling attention notice in the National Assembly Secretariat pertaining to the removal of top officials from the ISGS board. The Ministry of Petroleum, in a statement, however clarified that no board member had been removed arbitrarily. The term of two members had expired in February 2016 and the number of members was rationalised to 7 in July this year, it said.

“It can only be considered a veiled attempt to create controversy and harm the strategic energy projects. The decisions taken in the ISGS board meetings are subject to mutual consensus and accord,” the ministry said.

It pointed out that the ISGS board chairman had accorded approval to all significant decisions including the current projects being handled by ISGS in the 100 board meetings held since 1998 without any dispute.

“The choice of a former board member to question these decisions now reflects either poor judgment of the person or mala fide intent on his part.”

The ministry stressed that ISGS undertook all major infrastructure projects, including the IP pipeline, Tapi pipeline, Gwadar-Nawabshah pipeline and North-South pipeline, after feasibility and techno-economical study, preparing the business plan and benchmarking project costs according to Public Procurement Regulatory Authority (PPRA) rules.

“These projects are of immense strategic and national importance and have been approved by the highest forums including the federal cabinet, the Economic Coordination Committee and the Cabinet Committee on Energy,” it said.

IP pipeline

The ministry insisted that the IP pipeline project had not been shelved and due diligence was being carried out by ISGS to avoid dollar transactions and ‘snap-back’ provisions of the international sanctions, which were a central part of the agreement between Iran and the P+5 countries.

These issues have also been discussed by Pakistan and Iran at the highest levels.

The ministry claimed that the Gwadar-Nawabshah pipeline had been negotiated at a favourable price and terms with a Chinese contractor, which would also provide financing for the project.

The price committee negotiated a discount of $170 million for the project and got the promise of financing 85% of the engineering, procurement and construction (EPC) cost on easy terms, it said.

About the North-South pipeline, the ministry pointed out that apart from providing huge economic benefits, it was a landmark project and being implemented on the build-own-operate-transfer model by a state-owned enterprise nominated by the Russian government.

“No funds will be invested by Pakistan in the project and the Russian company will recover its capital and operational costs through a negotiated tolling fee based on domestic and international benchmarks.”

Published in The Express Tribune, August 21^st, 2016.

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