CPEC Authority ‘alerts’ govt: ‘Hidden’ costs in Saindak project can reduce GoP’s profit

ISLAMABAD: Chairman, China Pakistan Economic Corridor (CPEC) Authority has alerted the government that hidden cost in O&M of Saindak Copper-Gold Project can reduce government share/ profits, well informed sources told Business Recorder.

On February 9, 2022, the ECC was requested to consider the proposed 15-year extension in the lease contract period of Saindak Copper-Gold Project between SML and MCC, China with effect from 1st November 2022 to 31st October 2037 and approve the attached Addendum No.4 (Annex-TX of the summary) to the Lease Contract to be signed by SML Management with MCC.

The Petroleum Division informed the forum that efforts have been made to bring transparency and to increase visibility of the government by constituting an Overview Committee. Furthermore, better Terms and Conditions have been agreed due to extensive negotiations. It would enhance the GoP profits in future due to the enhanced share.

Chairman CPEC Authority stated that there may be some hidden costs in O&M operation and that could have reduced the government share/ profits. He suggested hiring a professional person/ firms to ensure that expenses are booked fairly.

The Petroleum Division responded that the concept of Overview Committee has been specifically added in the contract for the purpose.

Finance Minister endorsed the opinion and directed for an annual review by experts/ firm to bring transparency in the working of the company.

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Adviser to the Prime Minister on Commerce and Investment, Abdul Razak Dawood stated that the lease period should be reduced to ten years instead of the fifteen years, as previous lease was also for ten years. The Petroleum Division responded that any change in the terms and conditions at this stage could undermine the whole transaction; therefore, it is not recommended.

The Finance Division observed that as per practice, either Secretary Finance or his nominee are included in the Boards of Public Limited Companies but in this case, Economic Adviser of Finance Division has been included in the Board. They suggested a review, and the views of Finance Division were endorsed by the Chair.

After detailed discussion, the ECC further directed the Petroleum Division to carry out financial review of the project every year by an expert/ firm, to ensure transparency in the project.

The ECC also decided that Secretary Finance or his nominee should be included in the Board as representative of the Finance Division instead of the Economic Advisor.

Copyright Business Recorder, 2022