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June 9, 2020

Pakistan to attract FDI under PSDP Plus regime

National

June 9, 2020

ISLAMABAD: The PTI government has decided to allure foreign direct investment (FDI) from abroad under the unique concept of (Public Sector Development Program) PSDP Plus regime. All the ministries have finalised their projects for investment from abroad to this effect.

However, the government will attract a $5 billion investment in the oil and gas sector under the PSDP Plus regime developed by the Prime Minister Office, reveals an official document available with The News.

And to this effect, as per the document, the information about PSDP Plus have been sent to all Pakistan’s embassies and high commissions abroad for marketing the new plan for investment. The commercial and trade officers will disseminate the information among the relevant business houses in respective countries and actively pursue their seeking investment in the upstream and downstream sector of Pakistan.

Pakistan is endeavouring from pillar to post to attract FDI in various fields to enhance its economic base and generate job opportunities for the youth.

The document says the Prime Minister Office has developed a concept of PSDP Plus regime to attract investment in projects designed by the ministries on Public Private Partnership (PPP) mode of financing. Pakistan’s upstream and midstream sectors provide opportunities in E&P related activities as the country has enormous untapped hydrocarbon potential.

However, documents about investigation on Badin-IV Well in Sindh by NAB shows that that many senior officials of petroleum division who impeded exploration and production activities for many years and inflicted damage of $50 million to national exchequer are still facing NAB and this situation raises the question as to how PSDP Plus regime will bring dividends in the presence of such officials.

The E&P (Exploration and Production) companies from Kuwait and Canada which invested $60 million in Badin-IV well were badly discouraged when they were denied the rate of 25 cents per MMBTU which was allowed in the petroleum policy.

Because of the presence of such officials, the efforts of the prime minister seeking FDI in Pakistan are already undermined. Many E&P companies have already left the country and some have stopped the E&P activities in the country because of the questionable role of Directorate General Petroleum Concessions (DGPC). And to this effect, Additional Secretary Muhammad Ayub Chaudhry is given the task to complete the investigation against the role of DGPC for discouraging the investment. However, under the latest scenario, the Prime Minister Office has now come up with a new concept of PSDP Plus for investment abroad in the oil and gas sector.

Directorate General (Petroleum Concessions) regulates the upstream petroleum sector under petroleum exploration and production rules. The regulated activities include exploration license, leases, field development plans, well notices and other ancillary matters. In line with overall agenda of the government to crease ease of doing business careful review of Pakistan Onshore Petroleum (Exploration and Production) rules 2013 was undertaken in consultation with petroleum industry, consultants engaged for the purpose and guidance of Energy Task Force and it was noted that the rules were stringent in many cases and have never been objectively updated to capture the latest regulatory and business practices. So the rules have been amended with the approval of ECC with a progressive approach to regulate the sector for encouraging much needed investment in the energy starved country.

According to the documents, the government is going to launch this PSDP Plus regime to create the jobs which are badly needed particularly in the prevailing abnormal situation emerged out of COVID-19.

Pakistan is blessed with enormous hydrocarbon potential most of which is still untapped. The technical evaluations reveal that the original recoverable reserves stood at 1,246,877 million barrels of oil and 57.436 trillion cubic feet (Tcf) of gas. The current recoverable reserves are 347.878 million barrels of oil and 19.541 Tcf of gas. Pakistan has a large sedimentary area of 827,268 square kilometers in which only 1094 exploratory and 1443 appraisal and development wells have been drilled so far with an average well drilling density of 3 wells per 1000 square kilometers. These wells have resulted in 394 discoveries ratio of 1:2.80 which is quite attractive.

In Pakistan there are three zone and gas well-head price in Zone-I for exploration and production companies stand at $6.6 per MMBTU, for Zone-II $6.3 per MMBTU and Zone-III $6 per MMBTU and for offshore the gas price is fixed at $7 per MMBTU for wells at shallow level, $8 per MMBTU for deep and $9 per MMBTU for ultra deep wells.