LAHORE: In a notification to the Pakistan Stock Exchange (PSX), Pakistan Petroleum Limited (PPL) has challenged an unnumbered SRO by the Ministry of Energy (Petroleum Division) dated December 27, 2017.
PPL is party to the Tal Block Petroleum Concession Agreement (PCA) which was signed on February 11, 1999 pursuant to the Petroleum Policy of 1997. The company also signed a supplemental agreement dated August 28, 2015, along with other working interest owners for the Tal Block in accordance with the conversion regime introduced in the ‘Petroleum Exploration and Production Policy of 2012’ applicable at the date. The conversion regime was transformed and included in the supplemental agreement as a conversion package which included the revised price for the exploration and production of petroleum products and windfall levy on natural gas only.
The ‘Petroleum Exploration and Production Policy, 2012’ was revised by the ministry with the approval of Council of Common Interests vide the above mentioned SRO. The SRO implies that the windfall levy previously restricted in the supplemental agreement to natural gas is payable also on the exploration and production of oil/condensate, Petroleum Exploration And Production Policy, 2012 shall apply to the petroleum concession agreements that have utilised the conversion option prior to the revision and any entity not agreeing to the amendment will revert back to the prices applicable prior to the conversion.
The company challenged the SRO in Islamabad High Court (IHC) on the grounds that the terms of none of the existing petroleum concession agreements as amended to date by the existing supplemental agreements can be unilaterally revised by the government of Pakistan, nor can the government lawfully require and direct that such amendments be made mandatorily to include the imposition of windfall levy on oil/condensate, and nor can the government unilaterally hold and direct that the gas pricing incentives to which the company is presently entitled and is currently receiving under the existing conversion package as included in the supplemental agreement will stand withdrawn or that the company shall seize to be eligible for such incentives in the event of failure to execute fresh supplemental agreements.
The petition was heard on February 20 by the IHC which passed an order to maintain the present status quo until the next hearing on March 15.