Petroleum ministry clarifies news report

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ISLAMABAD, Aug 20 (APP): With reference to a news item titled “LNG pipeline and Gwadar terminal: ISGS head, director removed for pinpointing irregularities”, published in a section of press, the Ministry of Petroleum Friday termed the contents of the news items and allegations as “baseless and not true”.

“It is clarified in categorical terms that no Board member has been removed arbitrarily from Inter State Gas Systems Limited. The term of 2 ISGS Board members expired in February 2016 and the number of the Board members was rationalized to 7 in July 2016,” the Ministry said in a statement/clarification issued here.

“The administrative and procedural affairs of the Ministry are being subjected to unfair, prejudiced and sensational reporting with mala fide intent, and this report can only be considered a veiled attempt at creating unwarranted controversy and harming strategic national energy projects,” the statement said.

“It is also an infringement into the internal functioning of the Ministry, and the Ministry reserves its right to action in a court of law against the concerned individuals,” the statement added.

According to the statement, the decisions taken at the ISGS Board of Directors meetings are subject to mutual consensus and accord. The Minutes of the Board meetings are circulated, finalized in line with relevant established standards and regulatory frameworks, and prepared with consent of the Chair and all BOD members; thus any allegations of tampering with the record of the Board’s meetings are absolutely false.

Minutes of Board meetings are reviewed and approved by Board Directors in the next meeting and, once sanctioned, they are signed by the Chairman.

The Chairman of the ISGS Board has accorded approval to all significant decisions including current projects being handled by ISGS on record in the 100 Board meetings held since 1998 without any dispute.

The choice of a former member of the Board to now question these very decisions reflects on either the poor judgment of the person concerned or mala fide intent on his part.

All major infrastructure projects, including the Iran-Pakistan pipeline, TAPI pipeline, Gwadar-Nawabshah pipeline, and the North-South pipeline, were undertaken by ISGS after complete feasibility, techno-economical study, business plan, and benchmarking of project costs in a highly transparent process as per PPRA rules and with approval of the ISGS Board.

These projects are of immense strategic and national importance and have been duly approved for implementation by the highest forums including the Federal Cabinet, ECC, and CCE to mitigate the energy deficiency in the country.

ISGS has been nominated by the ECC for implementation and successful closure of these projects.

Contrary to the allegations made, the statement said, the Iran Pakistan Gas Pipeline Project has not been shelved. Due diligence is being carried out by ISGS to avoid the issue of Dollar transactions and the ‘Snap-Back’ provisions of the international sanctions which is a central part of the agreement between Iran and the P+5 countries.

These issues have also been the subject of negotiations between the Pakistani and Iranian counterparts at the highest levels.

The ISGS Board has been continuously briefed on the progress of the project since the agreement was signed in 2010. The Minister for Petroleum has also commented on these issues at various forums since 2013.

The Gwadar-Nawabshah pipeline project has been negotiated at a very favorable price and terms with a Chinese Contractor who will also provide financing for the project.

The final price for the project was negotiated by a Price Negotiation Committee approved by the ECC which included 4 ISGS Board members.

The Committee successfully negotiated a discount of $170 million for the project and obtained concessional financial terms for 85% of EPC costs to execute the project.

The ISGS Board has been fully informed of the project at all stages and the final price will be put up to the ECC for approval. The project is critical for Pakistan’s energy security and will provide minimum savings of $ 1 Billion annually for the national economy.

The North-South pipeline, aside from the huge economic benefits that it will provide, is a landmark project as it is being constructed on Build-Own-Operate-Transfer (BOOT) basis by a state-owned entity nominated by the Russian Government in pursuance of an Inter-Governmental Agreement signed by Russia and Pakistan.

No funds will be invested by the Government of Pakistan in the project and the Russian entity will recover its capital and operational costs through a negotiated tolling fee based on domestic and international benchmarks.

The project is still under negotiation and any figures mentioned about its costs and tolling fees are mere speculation.

The assertion that ISGS officials have been working without prior approvals and drawing financial emoluments in other entities is false. Also, no abnormal pay raise has been awarded to any official; all pay raises for ISGS employees are approved by the Board.

The record also shows that all ISGS Board members have received the Board fees as per the applicable rules.

It is also strongly refuted that consultants have been hired in violation of the rules; all consultants for the various projects have been hired with approval of the ISGS Board and all financial commitments including payments to the consultants were approved by the Board.

The Ministry of Petroleum and Natural Resources is committed to playing its role in resolving Pakistan’s energy issues and remains undeterred by individuals with vested interests and mala fide intentions, the statement concluded.