ECC approves Eni asset sale deal

The government on Thursday approved a sale deal between the Eni Group – one of top 10 global energy companies – and a local firm, marking the exit of yet another global player due to the prevailing unfavourable business conditions.

The government also approved an additional budget of Rs30.8 billion for the military, increasing the total defence budget to Rs1.594 trillion for fiscal year 2022-23.

Headed by Finance Minister Ishaq Dar, the Economic Coordination Committee (ECC) of the cabinet endorsed the sale-purchase deal between three companies of the Eni Group and Prime International Oil and Gas Company Limited (PIOGCL).

The approval was given on the condition that PIOGCL would be liable to the government for all the minimum work commitments and financial obligations and the government’s revenues would not be adversely affected after the change of effective control, according to a statement issued by the Ministry of Finance.

Global oil and gas exploration companies have in recent years exited Pakistan due to an unfavourable business environment. Last month, a representative of the Ministry of Law informed the Peshawar High Court that higher se- curity cost was one of the reasons for the pullout of foreign companies.

The ECC approved a summary of the Petroleum Division for change of effective control from Eni ULX Limited, Eni UK Limited and Eni Oil Holdings BV in respect of its subsidiary companies, i.e. Eni Pakistan Limited, Eni Pakistan (AEP) Limited and Eni Pakistan (M) Limited respectively, to PIOGCL, according to the finance ministry.

In March last year, Italy-based Eni reached an agreement to sell its shares in its Pakistani entities. PIOGCL is a newly established company formed by former local employees of Eni and Hub Power Company, the largest independent power producer.

The activities covered by the agreement include interests in eight development and production leases in the Kithar Fold Belt and Middle

Indus Basins and four exploration licences in the Middle Indus and Indus Offshore Basins. Eni’s main permits were in Bhit/Badhra (40% of working interest) and Kadanwari (18.42% of working interest). Other shares were in the permits for Latif (33.3%), Zamzama (17.75%) and Sawan (23.7%).

In another matter, the ECC revised its July 2022 decision to provide subsidised imported gas to the exporters of Sindh and Balochistan.

It approved a summary of the Ministry of Commerce, seeking an amendment to the earlier decision dated July 25, 2022 on the regionally competitive energy rates for export-oriented sectors during FY 2022-23 and allowed the amendment that “the electricity tariff will be effective from August 1, 2022, whereas the RLNG tariff will be effective from July 1, 2022.”

After the decision, the consumers of Sui Northern Gas Pipelines Limited (SNGPL) will be eligible for the subsidised imported gas.

The ECC approved a summary of the Ministry of Industries for release of Rs1.4 billion for the payment of salaries to 3,400 employees of the closed Pakistan Steel Mills (PSM) for financial year 2022-23. “This decision will ensure the disbursement of monthly salary to the employees,” said the finance ministry. The ECC was informed that the PSM management had sought permission to sack another 1,700 employees. Authorities have already removed 5,663 employees after the PML-N government decided to shut the mill in June 2015.

The Ministry of Commerce presented a summary for amendment in the Import Policy Order 2022 to allow import of Holy Quran subject to NOC from the relevant federal or provincial authority.

The summary was presented in light of the directives of the Lahore High Court and Balochistan High Court to the federal and provincial authorities to ensure error-free printing, publishing, recording and import of copies of the Holy Quran. The ECC, after discussion, approved the proposal.

It allowed the grant of a development and production lease for 15 years for the Kandhkot mining lease area on the existing gas price and subject to the condition that Pakistan Petroleum Limited (PPL) would pay all the financial obligations in accordance with the Petroleum Policy 2012.

Kandhkot discovery was made by PPL in 1959. The government granted the mining lease for 30 years in 1962, which was renewed for further 30 years in 1992.

The Petroleum Division submitted another summary for the revival of revoked petroleum exploration licences. Eleven licences had been revoked due to the non-performance of work commitment and non-payment of financial obligations by various companies.