Crisis over petroleum policy deepens

Additional secretary seeks transfer after alleged rift with petroleum minister

ISLAMABAD:

The crisis over allocation of gas to third parties and some other petroleum issues has intensified as another top official has resigned from the Petroleum Division.

Sources told The Express Tribune that Minister for Petroleum Musadik Malik has refused to work with secretary petroleum and additional secretary petroleum—leading to a tug of war.

Recently, a committee led by Deputy Prime Minister Ishaq Dar had approved allocation of 35% gas to third parties with a 100 mmscfd cap by oil and gas exploration companies.

This decision was hailed by the oil and gas industry as it would open the gas market for the private sector, resulting in improved cash flows, reduced circular debt and better price for exploration companies.

However, soon after this decision, the petroleum minister told the government that he would not implement the policy until and unless Secretary Petroleum Momin Agha and Additional Secretary Petroleum Zafar Abbas are removed from the Petroleum Division.

As the tussle between the minister and the top bureaucrats intensified, Zafar Abbas applied for leave and requested reassignment to another position, citing challenges in working under the minister.

This development cast a shadow over critical reforms, including the auction of future gas discoveries to the private sector by exploration and production (E&P) companies.

Sources said Zafar Abbas had played a pivotal role in preparing the implementation framework for auctioning gas discoveries.

Seeking transfer now, he has submitted his concerns to the petroleum secretary alongside a 100-day leave application, emphasizing his unwillingness to continue in the current environment. The framework, an essential component for operationalizing the Council of Common Interests' (CCI) directive from eight months ago, was approved by a task force led by Ishaq Dar.

The Executive Committee of the National Economic Council (Ecnec) was scheduled to review the proposal. However, the absence of the additional secretary raises concerns about the continuity of leadership during this critical period.

Tensions escalated as the petroleum minister accused the officials of bypassing him in key decisions, including agreements with Azerbaijan and the utilization of stranded gas.

These accusations were strongly refuted by the officials during a meeting chaired by Prime Minister Shehbaz Sharif, who expressed satisfaction with their explanations.

The discord has delayed the privatization initiative for the E&P companies' future gas discoveries, a move critical for attracting investment, reducing sector losses, and addressing the energy sector's circular debt.

Former DGPC Kashif Ali, another key figure in drafting the policy, was earlier reassigned under similar circumstances.

PM Shehbaz convened a high-level meeting with Ishaq Dar, the petroleum minister, and the senior officials to address the situation.

While the officials clarified their positions and refuted the minister's allegations, the request for reassignment by Abbas reflects the strained working relationship within the division. The petroleum minister's dissatisfaction with ministry officials has reportedly created an environment of distrust, impacting the morale of the division.

Sources said the minister's inability to build trust with his team is hindering the implementation of crucial reforms. The absence of senior officials, including the additional secretary, during the upcoming meeting of ECNEC is expected not to delay decisions on key policies.

These include auctioning gas discoveries and improving the energy sector's efficiency, both of which are vital for addressing Pakistan's energy crisis. This internal discord highlights the urgent need for better coordination within the Petroleum Division to ensure the success of reforms critical to the nation's energy future.

However, when The Express Tribune contacted the petroleum minister, he declared all reports of an internal rift "completely baseless and unfounded". "The ASP [additional secretary petroleum] was removed by the PM's office based on the audit of some administrative matters. This is a routine performance management activity," he noted.