ISLAMABAD:
Pakistan has adopted an ‘open handed policy’ to award multibillion-dollar mining contracts, by providing equal opportunities to global competitors including the United States (US), China and Russia.
China and Russia have long been arch-rivals of the US. At present, Pakistan is simultaneously engaging with all three countries.
The petroleum ministry has recently held a webinar with US officials and companies, and offered them joint ventures in mining contracts.
“We are offering equal opportunities to Russia, China and the United States (US) to engage in the mining sector,” Petroleum Minister Ali Pervaiz Malik told the media here on Thursday.
Pakistan is currently working on the multibillion-dollar Rekodiq gold and mining project, that is going to open avenues for investment from multiple countries like the US, China and Russia. He remarked that Rekodiq would be a role model to attract investment in the mining sector.
Responding to a question, he ruled out discrimination in awarding the mining contract to any country.
“I have been to Russia, and offered Russian companies to invest in Pakistan’s mining sector,” he said, adding that any company from these countries can participate in a bid when it is offered.
Responding to another question, he held the previous government responsible for signing the second LNG contract with Qatar.
“If the LNG contract had not been made, we might not be facing the current situation of default in gas sector,” he stated, adding that the government would take the decision of revising the LNG deal with Qatar which is due in 2026, keeping the country’s interests in view.
There is an issue of demand and supply in the country regarding LNG,” commented Malik, adding that 300 mmcfd of gas supply has been curtailed due to LNG.
He held the Power Division responsible for the current circular debt and gas curtailment issues, stating that the power sector is not prepared to lift the required gas supply.
Moreover, the Power Division had taken approval from the cabinet to reduce take-and-pay guarantees for LNG, making the power sector a key contributor to the problem. Take and pay guarantees have been reduced to 50% from 60%, which has irked the Petroleum Division.
The petroleum minister stated that there should be a unified energy ministry, and the Petroleum Division should be taken on board for any decision relating to the energy sector.
Pakistan is currently facing an excess supply of Liquefied Natural Gas (LNG), a situation largely attributed to its second long-term deal with Qatar. This agreement, initially envisioned to bolster energy security, has instead led to an expensive surplus of LNG within the country. The current government is now actively working to balance the nation’s energy demand and supply.
The minister said that the expensive RLNG compelled the government to suspend indigenous 300 mmcfd gas production, and it is trying to manage the supply and demand side.
Responding to recently increased fixed gas charges, Malik said that the Rs150 billion subsidy to protected gas consumers in addition to the Rs250 billion RLNG diversion from power to domestic consumers compelled the government to increase the fixed charges by Rs200, adding that the system’s gas was still cheaper than LPG. “We are in an International Monetary Fund (IMF) programme which wants a zero deficit,” he noted.
Responding to a question regarding the waiver for oil and gas from Iran, he said that the ministerial committee was working towards taking a decision in this regard.
He also added that Pakistan and Iran have been in arbitration in Paris on the Iran-Pakistan (IP) gas pipeline project, and a ministerial committee was looking over the situation after the Iran-US war.
Regarding a waiver to China and India, the minister said that they were not in an IMF programme whereas Pakistan is in an IMF programme. “Therefore, we have to be careful regarding whether we have to take a waiver or not,” Malik remarked, adding “we cannot go to default.”
About oil imports from Iran, he said that the country is still facing restrictions from the US. “The ministerial committee has to take a decision on this,” he added.
Addressing refinery upgradation, he asserted that the refineries’ demands were justified, and tax has been exempted on their output and their margins have been regulated. “This is against basic principle,” Malik remarked, adding that undue burden should not be put on the refineries if the government wants them to invest $5-$6 billion in upgradation projects. He said that the matter of zero-rating was raised with the IMF, which stated that ‘zero-rate’ would not be viable.
The government had exempted sales tax in budget 2024-25, which had resulted in the loss of Rs 34 billion for refineries and the IMF. The government had also committed to the imposition of sales tax of up to 5% in budget 2025-26, but it had continued zero-ratings, irking the refineries, which has planned investments of $6 billion in the refining sector.
“I have tried my best to resolve the issues faced by refineries, and the finance minister has agreed to resolve it,” the minister added.
Regarding oil and exploration sector, he criticised the imposition of a 40% corporate tax on exploration companies, which was very high and would hurt the government’s indigenisation efforts in oil and gas exploration.
Responding to a question relating to the winding up of operations by foreign companies in Pakistan, he said that a Turkish company had participated in a bid held in April. He further added that the company had also signed an agreement with Oil and Gas Development Company Limited (OGDCL) to submit a joint bid for offshore drilling in Pakistan.
About JJVL operations of its LPG plant, he said that the SSGC was working on it, and it would start operations after some time.
On the recent increase in oil prices, Malik clarified that the government had not increased the petroleum levy on petroleum products.
