ISLAMABAD: Pakistan has suffered a mammoth loss of $500 million (Rs50 billion) just because of the fact that the Oil and Gas Development Company Limited (OGDCL) has failed to install an LPG plant at Nashpa field in Khyber Pakhtunkhwa (KP) in the last six-year period, one of the top officials at OGDCL told The News.
“Nashpa has the potential to produce 400 ton LPG a day whereas the country’s requirement stands at 2,400 tons out of which 800 tons LPG is being imported and the remaining 1,600 tons a day is being produced locally. In case, an LPG plant had been installed some five years back, Pakistan’s economy would have reaped the benefit of $500 million.”
If 400 tons LPG a day had been added on time, the LPG being imported would have been reduced to just 400 tons a day, meaning the foreign exchange being spent since long would been saved.
Now under the latest development, the KP government has told the top management of OGDCL that it has lost its right to install an LPG plant at Nashpa, so the KP OGDCL will now itself install the LPG plant.
In a strong-worded letter with subject, ‘LPG plant at Nashpa’ written on January 13, 2016 to the OGDCL managing director of which the copy is exclusively available with ‘The News, the KP OGDCL mentioned the Clause 20.3 model PCA (petroleum concession agreement) 2009 saying that OGDCL was supposed to install an LPG plant within four years of grant of lease.
The KP government’s letter also highlights the clause 3.1.1 of LPG policy 2013 which clearly states: “In case E&P (exploration and production) company remains unable to implement the development plan with reference to extraction of LPG as per provisions of available petroleum concession agreement (PCA), its right would stand surrendered to the government which can get it extracted through competitive bidding.”
The letter further says about the intention of the KP government that the KP OGDCL, therefore, wants to install an LPG plant at Nashpa as per the law. The KP govt to this effect has sought access to the Nashpa site to assess the project.
However, when contacted, OGDCL spokesman Ahmad Hayat Lak, who is also General Manager Legal, said he had not gone through the letter the KP OGDCL had sent.
Mr Lak said that Nashpa was a joint venture project and its PCA had no mention of any such thing that said, “If the E&P fails to install LPG plant in four years time its right would stand surrendered.”
However, he agreed that LPG plant should have been set up in 2 years time, but he argued saying that the tender process as per the laid down procedures took at least 13 months to complete and on this very project, one tender process got completed but contract could not be awarded as the lowest bidder was evasive to get the contract as said bidder was of the view that the price it quoted as $70 million was less than the cost.
The OGDCL re-initiated, Mr Lak said, the bidding process which also took 14 months and now the contract of $160 million had been awarded to the consortium of Chinese and local companies. Under the contract, apart from setting up LPG extraction plant, the contractor would also complete gas gathering and de-hydration plants. Mr Lak expressed the optimism that LPG extraction from Nashpa would start after 18 months as the contract had started mobilisation of its machinery to the site.
When his attention was drawn towards the bitter fact that country had braved mammoth loss of $500 million, Mr Lak responded by saying that he had already heard such observations. However, he said,” Had the OGDCL been the privatised entity, it would have never gone for LPG extraction plant, but since the company was public sector entity, the social aspect of providing LPG to the people remained dominant in the decision to install the LPG plant as the economic aspect of the decision was not fruitful if kept in view the declining crude oil prices in the world.”
