ISLAMABAD: Through a recent letter the Transparency International – Pakistan (TIP) has lodged a complaint to the Prime Minister over nonpayment of royalty amounting to Rs 1.13 billion by oil firms.
The TI Pakistan has recently written to the prime minister that it has received a complaint against SPUD Energy and Frontier Holding on willfully defaulting of their obligations to pay outstanding royalty amounting to Rs 1.13 billion at sale of natural gas and the crude oil from Reti Maru Field and Zargun South Field.
The letter by TIP has said that SPUD Energy had willfully defaulted at its obligation to pay the outstanding royalty of Rs834,821,397, while Frontier Holding was defaulting to pay the outstanding royalty of Rs 303,195,732.
It has been highlighted that SPUD Energy was awarded license to undertake petroleum exploration activities at Guddu and Bolan blocks, while Frontier Holding had Badin IV South Block, under the Pakistan Petroleum (Exploration and Production) Rules, 1986.
TIP has said that after the commercial discovery at these blocks Sui Southern Company (SSGC) was the buyer of the natural gas and crude oil as well as condensate from Bolan Block and Badin IV South Block. The Engro Fertilizers was the buyer of natural gas from Guddu Block.
“Under Rule 36 of the 1986 Rules read with the Article 9.1 of the Petroleum Concession
Agreement (PCA), the license holders SPUD Energy and Frontier Holding are under an obligation to pay royalty to the government at a rate 12.5 percent of petroleum produced and saved,” TIP has said.
The TIP letter has highlighted that there have been irregularities by the two firms and added that Directorate General Petroleum Concessions (DGPC) has issued various Show Cause Notices and Default Notices to both the companies.
The DG PC has also asked the buyers of oil & gas from these companies including SSGC, Pakistan Refinery and others to withhold payments against SPUD from invoices for sale of Natural Gas and Crude Oil from fields in which SPUD had working Interest.
The TIP has attached the financial statements of these companies and stated that instead of paying government obligations these defaulters have paid shareholders a loan worth millions of dollars using gas sales receipt which is totally not just illegal but also morally incorrect.
“They have also charged consultancy services with the help of their subsidiaries,” the Transparency International Pakistan’s letter added.
“TI Pakistan requests the Prime Minister of Pakistan to kindly look into this matter, and if it is found to be correct, then direct the regulators to first recover the outstanding amount Rs1.13 billion from M/S SPUD Energy and M/s Frontier Holding prior to proceeding further on these contracts,” the letter concluded
