ISLAMABAD   -   The Senate Committee on Petroleum has rejected the proposed privatisation of Pakistan Mineral Development Corporation (PMDC), arguing that the federal government only holds the leases for coal/salt mines, while the resources are owned by the provinces, and questioned how the federation could privatise the provincial resources without consultation.

The Senate Standing Committee on Petroleum that met under the chairmanship of Senator Umer Farooq, raised concern over the proposed privatisation of PMDC, arguing that the federal government lacks the mandate to privatise provincial resources, and the move will make 5,000 employees of the PMDC jobless.

While commenting on the proposed privatisation of PMDC, Senator Sadia Abbasi pointed to the problematic outcomes of previous privatisation efforts, such as Pakistan Telecommunication Company Limited (PTCL), and warned of similar repercussions for PMDC. Pakistan still has $800 million, of the PTCL privatisation proceeds, tied up in financial issues, which hinders national development, Senator Abbasi remarked.

Senator Manzoor Ahmed, also expressed strong concerns over the potential loss of 5000 jobs as a result of PMDC privatisation. “We need to ask whether PMDC is operating at a loss,” Senator Manzoor said, asserting that the company has been profitable and should focus on protecting local employees.

In his briefing, official from the Petroleum Division outlined the legal framework for privatisation, noting that PMDC is classified for privatisation under the State-Owned Enterprises (SOEs) Act of 2023. The cabinet had decided to add PMDC to the privatisation list, with its shares wholly owned by the federation, the official added.

Secretary Petroleum Division Momin Agha informed the committee that the government is not privatising the resources; they are privatising PMDC.

Secretary Petroleum further informed the committee that PMDC has reported profitability for the past three years, placing it in the second category for privatisation.

Senator Qurat-ul-Ain Marri questioned how the federation could privatise land that belongs to the provinces without proper consultation.

Secretary Petroleum Momin Agha again clarified that only the corporate entity is slated for privatisation, not the land or leases, and added that further details would emerge after the appointment of a financial advisor.

The government officials failed to convince the committee. The committee members stressed the need for safeguarding provincial resources and called for a more cautious approach to ensure the protection of assets and jobs.

Finally, the committee rejected the PMDC privatisation proposal.

The committee also raised concerns regarding PMDC’s outdated methods and machinery, alongside reports of 80 fatalities over five years.

The committee also discussed the delays in the gas supply project for Gulistan Tehsil in Qilla Abdullah, noting that the project was inaugurated in 2015. Senator Abdul Shakoor Khan highlighted that a 5 km area was excluded from the plan, preventing the project’s initiation. The Director General of Gas informed the committee that the project has an allocation of Rs500 million, with plans for a 22 km gas pipeline. Senator Manzoor Ahmed pointed out that the project’s progress has been hindered by a ban on new gas connections. Restrictions on additional connections have been in place since 2021, Secretary Petroleum said.

He emphasised the need for a comprehensive briefing on gas policies, noting that such restrictions are common globally. Senator Abdul Shakoor Khan expressed concerns that villages along the pipeline route are not receiving gas. Senator Marri suggested implementing a policy to provide gas to areas adjacent to the pipeline, and the committee chair agreed that the gas connection policy requires revision.

Additionally, the committee reviewed dealer margins and operational policies for petroleum dealers. Representatives noted that banks deduct fees from fuel sales, with 80 paisa deducted for every Rs100 in sales.

The Chairman of the Oil and Gas Regulatory Authority (OGRA) confirmed that the agency calculates costs and margins for Oil Marketing Companies (OMCs) and dealers, but noted that credit card deductions fall under agreements between dealers and banks. The dealers’ margin was set at Rs8.64 per litre last year, which included franchise fees.

The committee directed the Petroleum Dealers Association and OGRA to collaborate and resolve the issue.