GHPL on bumpy ride as debt grows, funds choked off

Oil exploration company gets stuck due to dispute over MD’s pay

ISLAMABAD: It is not going to be easy for Government Holdings Private Limited (GHPL) to run its affairs as it has got trapped in a huge pile of circular debt and the flow of funds to strategic projects has been choked off, officials say.

The government has set up new subsidiaries of GHPL namely Pakistan LNG Terminal Limited and Pakistan LNG. The former is tasked with developing a new liquefied natural gas (LNG) terminal whereas the latter is going to make LNG imports.



GHPL - a relatively small petroleum exploration company wholly owned by the government - has got stuck following the demand of a hefty pay package of Rs10.25 million per month by new Managing Director Shahid Islam.

Islam, however, had been a key player in striking a $15-billion LNG import deal with Qatar. Earlier in January 2015, he was given the charge of acting managing director of Pakistan State Oil (PSO) as all high-ups of the oil marketing company had been suspended because of acute petrol shortage.

He held the slot for six months and was replaced after striking all big LNG deals.



Of the companies managed by the Ministry of Petroleum and Natural Resources, Oil and Gas Development Company, Pakistan Petroleum Limited and PSO are large ones and play a bigger role in the petroleum supply chain.

According to officials, the PSO managing director is receiving the highest pay package of Rs5 million among these companies, which is less than half of what was demanded by the GHPL MD and even then a source of debate among relevant circles.

GHPL, working with the objective of pouring investment to increase petroleum production, is among top five petroleum exploration and production companies in Pakistan with a share of 43,500 barrels of oil equivalent per day.

Board reluctant

The new board of directors of GHPL is not ready to endorse the high salary for the MD and in the process the flow of funds needed for its subsidiaries has been stopped.



GHPL, which manages government’s working interest in 62 development and production leases and holds 50 exploration licences, has been running in profit but is now facing a circular debt of Rs37 billion.

Owing to the stalemate caused by the remuneration dispute, the managing director has refused to draw salary since his appointment 23 months ago. His hiring was also controversial as he had not applied for the post and was 64 years of age - more than the set limit - at the time of appointment.

He was given a contract for three years, which was also in contrast to the two-year term for managing directors of other public sector companies.

The previous board of directors of GHPL had approved the monthly pay package of Rs10.25 million for the MD and sent it for approval of Prime Minister Nawaz Sharif. However, the premier refused to give his backing and directed that the matter should be taken up by the board again.

Petroleum and Natural Resources Minister Shahid Khaqan Abbasi had also asked the company board to finalise the pay package. However, the new board did not approve the former board’s decision and suggested that the remuneration should be in the range of Rs1.1 to Rs1.5 million.

For the last four months, the MD has been writing to the Ministry of Petroleum, asking it to clear his dues in line with the previous board’s decision.

In the meantime, three key officials - the CFO and two technical general managers - have left the company. The general managers were also denied their benefits for one year, prompting the Federal Ombudsman to direct the MD to release their remunerations.

According to officials, the board has taken some key decisions on making payments to the contractors but due to delay in issuance of minutes of meetings by the managing director, work on some of the projects has come to a halt.

Published in The Express Tribune, September 3^rd, 2016.

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