Mari Gas: ECC rejects increase in gas exploration expenses

Ministry of Petroleum & Natural Resources had submitted a summary seeking approval for raising the expenditure limit.

ISLAMABAD:

The Economic Coordination Committee (ECC) has turned down a proposal suggesting an increase in exploration expenditure limit from $20 million to $40 million per annum for Mari Gas Company Limited and called for taking up the issue with the Council of Common Interests (CCI) because of Sindh’s reservations, sources say.

The Ministry of Petroleum and Natural Resources had submitted a summary with the ECC, seeking approval for raising the expenditure limit for Mari Gas in a meeting held on January 20.

However, the Sindh government strongly resisted the move, fearing it would cut its share of gas development surcharge.

Sources told The Express Tribune that some federal ministers from Sindh fiercely opposed the proposal, prompting the ECC to ask the petroleum ministry to take the proposal before the CCI for seeking consent of provinces.

Some ECC members voiced concern, saying Sindh’s reservations in this connection could not be ignored.

The government has a 20 per cent share in Mari Gas while Oil and Gas Development Company (OGDC) holds a 20 per cent stake, Fauji Foundation has 40 per cent shares and the general public has 20 per cent.

The central government has been providing $20 million to the company for many years for accelerating exploration activity by deducting the amount from the gas development surcharge which is given to provinces.

Giving reasons, representatives of the petroleum ministry told the ECC that Mari Gas sought the increase in expenditure ceiling on the grounds that it was offered a lower wellhead gas price compared to other exploration companies. The company was receiving Rs56 per million British thermal units.

In the summary, the ministry argued that Mari Gas could not step up exploration activity because of scarcity of funds.

Sources said the company’s accounts had not been audited by the Auditor General of Pakistan (AGP).

An official said the petroleum ministry had written a letter in 2001, seeking exemption for Mari Gas from audit by the AGP.

There were calls that the government should ensure transparency in the affairs of Mari Gas, which could hit gas development surcharge of provinces and the ministry should involve the AGP for conducting the audit of money being spent on exploration.

Published in The Express Tribune, January 26^th, 2012.