Mari Gas refuses to sell ‘irregularly’ acquired land

OGRA orders sale; MGCL wants to recover price; insider say MGCL overpaid, recovery unlikely.

ISLAMABAD:

Mari Gas Company has shelved the plan to construct a new building for its head office in Defence Housing Authority (DHA) Rawalpindi after the Oil and Gas Regulatory Authority (Ogra) termed the purchase of land ‘irregular’.

The ministry of petroleum has directed the gas company to return the money to the government that had been spent on the purchase of land. However, the MGCL management has refused to pay the money with immediate effect and requested a delay till land value rises and they can recover the full cost of the land,” sources said.

Earlier, the MGCL board of directors (BOD) at its meeting on September 28, 2009 had approved the plan to build a new head office in DHA at a cost of Rs1.3 billion declaring its present head office in G-10/4 sector of Islamabad a ‘security risk’ that was built 10 years ago.

The MGCL management had also purchased two plots at a high price adjacent to its existing building for expansion. Sources maintained that the funds for the existing building and for new plots were provided by the federal government out of provincial receipts, namely the gas development surcharge.

“Now the BoD of MGDCL has decided to sell the plot in DHA Rawalpindi,” sources said. The board has also observed that prevalent land values were lower and that the company should wait till land prices rise to avoid a loss on resale.

Interestingly, the sources maintained that the plot in DHA was bought at higher rates, making it unlikely that the company will recover the full price of the plot.

Ogra in its decision on fixation of Mari Gas well head gas price for financial year 2010-11 had observed that the petroleum ministry in a letter on May 28, 2010, stated that it had declined MGCL’s request for the construction of a new head office in DHA-II. Ogra had also termed purchase of land for new head office building ‘irregular’, noting that it was purchased without prior approval from the ministry.

MGCL is owned by Fauji Foundation, the government, OGDCL, and private shareholders, with stakes of 40, 20, 20 and 20 per cent respectively.

Based on the petroleum ministry’s stance, Ogra directed MGCL to sell the plot in DHA and add the proceeds into the gas pricing application.

Published in The Express Tribune, May 14^th, 2011.