Five blocks awarded to KPOGCL

on 20/08/2017
new oil & gas exploration

Oil & gas: Center vs Provinces

Khyber Pakhtunkhwa Oil and Gas Company Limited (KPOGCL) has been awarded five blocks for exploring oil and gas in the province. The move has worried the Federal Ministry of Petroleum and Natural Resources  FMPN which claims it cannot be done with competitive bidding.

It is the very first award which the concerned ministry has not given nod for. Rather, it says it has not given clearance for as many as 41 blocks yet to be explored. Only the one called desert has been cleared.

The ministry has written to the defense division, which has issued NOC for the award the blocks cannot be awarded to the company without competitive bidding. The blocks where NOC has been issued include Dera Ismail Khan East Block, Miran Block, Lakki Block, Nowshera Block and Dera Ismail Khan West Block.

Director General Petroleum Concessions (DGPC) has reportedly said in his communication with the ministry that none of the 41 blocks except “the desert” had been cleared. It because of this reason the ministry has not been able to initiate the bidding process for awards of the blocks.

DG. PC claimed that the subject of oil and gas is included in part-II of Federal Legislative List (FLL) and, as per constitution, the executive authority on the matter rested with the federal government.

KPOGCL may be one of the companies, which may participate in bidding round either as operator or non-operator. Therefore, the blocks cannot be awarded to the company without competitive bidding.

The role and function of the provincial directors are subject to administrative control of the undersigned and therefore they cannot interact with any ministry/ division/department/ institution without prior written approval of the DG PC.

As a matter of principle, the provincial directors are not allowed to issue letter to any federal ministry/division/department and can only liaison with the government of the concerned province, the letter said.

DG PC has asked the defence division to confirm that clearance of five blocks mentioned at para-5 above is not specific to the KPOGCL and that this ministry may initiate a competitive bidding process after which block will be granted to successful bidders.

Officials in KP view the situation differently and believe the letter was in sheer violation of the constitution which has given equal rights to the federal and provincial governments regarding management of oil and gas sector.

Article 172(3) of the Constitution inserted through the 18th Amendment defines the ownership of provinces and the federal government in mineral oil and natural gas.

They said that in pursuance of Article 172(3), the Council of Common Interest (CCI) approved Petroleum Policy 2012 formulated by Ministry of Petroleum, Directorate General of Petroleum Concessions DGPC has to be reorganised.

Provinces have been making requests for the reorganization of the directorate but all went in vain. The federal government has to enable a more proactive management of resources through establishment of a reorganised DGPC comprising of a federal and provincial representatives with federal director as ex-officio director general and providing the necessary control and procedures to enhance the effective management of Pakistan’s petroleum reserves.

Provinces say the federal government has failed to implement one of the more important clause of the Petroleum Policy 2012, which is in total violation of the 18th amendment and contempt to the Council of Common Interest (CCI)’s decision.

It merits mentioning that Sindh, Baluchistan and the Khyber-Pakhtunkhwa have appointed provincial directors but DGPC is not paying salaries to them.