Staff Report
ISLAMABAD: In a move that has raised serious concerns about transparency and conflict of interest, Petroleum Division is once again pushing to install officials from state-owned enterprises (SOEs) into key positions of the division.
This decision comes despite a 2020 directive that called for the repatriation of such officers, specifically warning of the risks these placements posed to impartiality in government decision-making. The 2020 notification highlighted the dangers of these appointments, emphasizing that they created the perception—or even reality—of biased policymaking and undue influence from the officials’ parent companies.
Unfortunately, the lessons of the past seem to have been ignored, leading to the re-emergence of a problematic practice that could severely undermine Pakistan’s energy sector.
At the heart of the issue is the potential for conflicts of interest when officials from SOEs like Oil and Gas Development Company Limited (OGDCL), Sui Southern Gas Company Limited (SSGCL), and others are embedded in government regulatory bodies like the Directorate General of Petroleum Concessions (DGPC). These officials, while technically government employees, often maintain loyalty to their parent companies, raising questions about whose interests they truly serve.
One glaring example of this is Imran Farid, an OGDCL employee who was repatriated as part of the 2020 directive but has remained at DGPC as Deputy Director. During his time at DGPC, Farid has had significant influence over critical decisions related to exploration licenses, leases, and third-party gas sales, decisions that directly benefit OGDCL. This situation is particularly evident in the case of the Sinjhoro gas field, where third-party sales were regularized in a manner that protected OGDCL’s interests while disadvantaging competitors.
This is not an isolated case but a systemic issue that threatens to cripple Pakistan’s energy sector. The 2020 directives, which called for the return of officials from SOEs within three months, were specifically designed to prevent these conflicts of interest. They mandated that officers from companies like OGDCL, SSGCL, and MPCL, working on an attachment basis in government departments, be repatriated to ensure impartiality in decision-making processes.
However, the Ministry of Energy seems poised to reverse these reforms, a move that has already proven detrimental in the case of officials like Imran Farid. By continuing to embed SOE employees in regulatory bodies, the Ministry risks turning its back on much-needed reforms that are crucial to the energy sector’s revival.
The current trajectory is deeply concerning for Pakistan’s energy sector, which has been crippled by a lack of transparency and a system that favors state-owned enterprises over private sector competitors. SOEs like OGDCL, with their embedded officials, hold undue influence over policy decisions, regulatory approvals, and resource allocation, leaving private companies at a significant disadvantage. The consequences of this imbalance are dire: foreign investors have been driven away, and private exploration and production (E&P) companies struggle to operate in a biased regulatory environment.
The most recent evidence of this troubling practice lies in a document obtained from the Ministry titled “Attachment of Officers from OGDCL, PPL and ISGSL.” This document reveals that the Ministry is actively seeking to place more officials from these companies into DGPC roles, despite the clear conflicts of interest this creates. Among the officials slated for immediate attachment are Asif Hafeez (Financial Analyst from ISGSL), Qazi Umair (Senior Geologist from PPL), and Sami Ullah Khan Zimri (Senior Geologist from OGDCL). While the rationale for these appointments is a supposed shortage of professional human resources within the DGPC, the potential consequences are far more troubling.
Compounding the issue is the leadership at the DGPC itself. Mr. Riaz Ali, currently serving as acting Director General, has been criticized for his lack of capacity and intellectual understanding of the upstream energy sector’s complexities. Instead of addressing these challenges by building internal capacity within the government, he has relied on questionable hires from SOEs, further deepening the conflict of interest problem. Under his leadership, the DGPC has failed to maintain the momentum of much-needed reforms, leaving Pakistan’s energy sector more vulnerable than ever.
Under previous leadership, the DGPC played a critical role in shaping policy and driving reforms that benefited the nation. However, under Mr. Riaz Ali, not only has the office struggled to manage these challenges, but it has also contributed to a regulatory environment that disadvantages private companies and deters foreign investment. International energy companies such as Shell and BP have exited Pakistan, unwilling to operate in a market so heavily skewed in favor of SOEs.
In conclusion, if Pakistan hopes to address its ongoing energy crisis and restore the health of its E&P sector, it must take decisive action to ensure that regulatory bodies like the DGPC are free from conflicts of interest. The government must end the practice of embedding SOE officials within its ministries and agencies and instead focus on building independent regulatory institutions that can create a level playing field for both public and private sector companies. Failing to do so will only deepen the crisis and further erode trust in Pakistan’s energy sector.
The situation is exacerbated by reports that Riaz Ali has begun reporting directly to the Petroleum Minister, bypassing the Secretary of Petroleum. This violates the rules of business and has left the Secretary in a helpless position, constantly caught between managing these issues and firefighting ongoing crises within the petroleum division.
It is pertinent to mention that Pakistan’s energy future depends on restoring transparency and independence to its regulatory frameworks. Anything less will only further undermine the nation’s ability to capitalize on its vast energy resources.
