Islamabad: The Federal government has removed all the private members from the Inter State Gas Systems (ISGS) Board of Directors after the chairman of the board has pointed out massive irregularities in the Gas Pipeline projects and mismanagement in the interstate company.

The chairman BoD, Shehzad Ali Khan, was also removed from his position without the approval of the BoD, official documents revealed. In two separate letters addressed to the Federal Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi, and Managing Director ISGS, Mobeen Saulat the Chairman pointed several irregularities in North South Pipeline, Gwadar Nawab Shah Pipeline and the internal affairs of the Inter State Company, the source said.

It was alleged, in the letters, that for the $ 4.240 billion North South Pipeline and Gwadar Nawab Shah Pipeline the people of Pakistan will pay $ 20 billion to the companies in 20 years.

On August 10, Chairman of the BoD ISGS wrote a letter to the Managing Director ISGS, Mobeen Saulat, and pointed several irregularities in the management of the ISGS. Infuriated by the letter, the government, on August 11, issued directives for the removal of the two private members from the BoD of the ISGS, source told The Nation.

There were nine members on Inter State Gas System BoD, including seven government officials and two private members, but now the government has reduced the number to seven and also removed the names of private members from ISGS website.

According the letter written on August 10, Shehzad Ali Khan alleged that the management of ISGC is involved in the forgery of the Minutes of the BoD’s meetings. “Even some pages are without signatures of the then BoD chairman,” it was alleged. 

It was also alleged that certain staff of the Inter State is working in two other subsidiary companies of Government Holding Private Limited (GHPL) without the approval of either the HR committee or BoD. These staffs members are not only drawing their full salaries from ISGS but are also drawing their salaries and benefits from the other two companies.  Besides, the salaries of certain staff  members of ISGS has been raised abnormally high in the last two years which also needs to be reviewed by the BoD.   

The letter further alleged that major vacancies in the technical department are lying vacant since long and as a result hefty consultancy charges are being paid to the consultants. So far, ISGC has paid almost Rs 2.5 Billion to just one consultant for the Iran-Pakistan Pipeline (now Gwadar-Nawabshah project) whereas there is no ground work has started on the project.

It was also alleged that the ISGC is currently working on two important pipeline projects but the company has send its only GM technical on Ex-Pakistan leave. It is difficult to understand that under these circumstances how ISGC will manage to do the technical and financial evaluations, the letter said.

On August 16, Chairman BoD sent another letter to the Federal Minister of Petroleum and Natural Resources and claimed that the ministry has even tried to manage and implement important decisions through Managing Director of ISGS without the authorization of BoD.

It was further alleged that IP project was reshaped as Gwadar Nawab Shah Pipeline and it was planned without technical and financial feasibility studies. The consultant of the IP was assigned the work of GNP without the authorization of the BOD and against the PPRA rules, he alleged. Similarly the LNG terminal at Gwadar was also taken without feasibility study, availability of options, its cost benefit effects and without the approval of the BoD.

The GNP project has been projected on the basis of Commercial Loan and the loan has been agreed on commercial terms apparently without carrying out the actual feasibility and without adopting the proper competitive process. The project is being undertaken as Government to Government on single bit basis without any tendering process. The BoD  was bypassed as the decisions were taken by the Ministry and the Company MD. 

The Chairman further alleged that since the future of Iran Pakistan pipeline is not clear yet therefore it is useless to spend over 2 billion dollars on GNP project. It would be better if the government constructed another LNG terminal at Karachi instead of Gwadar.

Similarly the North South Gas Pipeline was initiated without adopting the competitive process under the disguise of G to G contract and was awarded on BOT basis to a black listed company. The vested interest can be gauged from the fact that the total cost of the NSP Project of $ 2.2 billion whereas 0.526 billion dollars as annual charged on “Take or Pay” basis for next year meaning that for the project worth $2.2 billion the people of Pakistan would end up paying $ 10.52 billion in next 20 years. 

The total Capital cost of both GNP and NSPP is $ 4.3 billion but the public would end up paying $ 20.240 billion in next 20 years, it is alleged.

The scribe has send nine questions to the MD ISGC and following are the replies;

Regarding forgery he said that as practiced in all other public sector entities, the corporate office of ISGS maintains audio record, prepare transcripts and send draft minutes of Board meetings to Chairman who after review gives approval to circulate to all other directors of the Board. There is complete trail of changes available with the corporate department. During the Board meeting, Board review the minutes, and in case of no more comments give approval. Once approved, Chairman signs the minutes. The signed minutes of the meeting become the official record.

It is therefore difficult to comprehend that in the presence of so many evidences and reviews how one individual will be able to ‘insert paras’ or ‘forge minutes’ and that too for minutes which are in the draft form and subject to review and approval of the Board? Until and unless the minutes are signed by the Chairman, any change therein would not tantamount to “forge” or “forgery”.

On the issue of company officials working multiple  jobs, MD replied, upon MPNR’s instruction, the said role was assumed and informed to the Board members. With the concerted and well-appreciated efforts, the two other companies are fully operational and important milestones achieved. Important to note that the respective Boards of the two companies approved allowances to carry out these additional responsibilities, the same when given to team engaged was returned with thanks to the Companies.

Regarding abnormal raise in the pays of some employees, the MD said that the Company pays annual increments with the approval of the Board and in accordance with the procedure laid down in the Company Rules. The payment of increments has been made in compliance with Rules and Board decision. All approvals from Competent Authority are on record along with the Management Notes and minutes of meetings held during the tenure.

On the question of vacant post, he said that the development of the Projects will determine the scale of operations and accordingly the induction plan; there is no point of unnecessarily overburden the expenditure beforehand.

Regarding advance payment to the consultant of IP, he said that “No payments made in advance. All payments made to the Consultant are strictly in accordance with the contractual arrangement approved by the Board, all budgets are approved by the Board and progress is regularly reviewed by the Board. All such payments are not only subject to Commercial and Statutory Audits but also by the GHPL audit team. In fact, huge savings were made through an efficient combination of in-house expertise and external specialist knowledge.

On the query of sending GM technical on ex-Pakistan leave, he said that the GM (Technical) has completed the task on time and has been granted leave to perform HAJJ.In his absence, Deputy GM is looking after Technical department In addition, there is a designated team for each project with assigned project manager/deputy project manager role to run the operations without any gap.

Regarding IP project he said that the project is not shelved. Board has given approval to each and every decision and accordingly action taken by management. Everything is on record.

Regarding GNP and NSP he said that complete feasibility and technical reports are available on record.Both GNP and NSP are done under G to G arrangement with concessional financing from China and Russia. Project costs are less than the local Sui costs.

In his letters and later while talking to The Nation


Shehzad Ali Khan said that the decision to remove the private member  and reduce the number of BoD’s member was illegal and against the Article of Association, the Companies Ordinance 1984 and Public Sector Companies(Coordinate government) Rules 2013. 

The ministry has no power to remove him from the chairmanship, he


. “The decision was taken unilaterally which is totally illegal as according the rule the Chairman of BoD, ISGC, can only be removed by the BoD of GHPL. To implement the  decision of the GHPL board the government will  need the endorsement of the members of BoD ISGC, he added.  

​A spokesman of the petroleum ministry denied the allegations.