ISLAMABAD: Chairman of the China-Pakistan Economic Corridor Authority (CPEC) has alerted the government that hidden costs in the operation and maintenance of the Saindak Copper-Gold project may reduce the government’s share/benefits , informed sources said company registrar.
On February 9, 2022, the ECC was asked to consider the proposed 15-year extension of the lease term of the Saindak Copper-Gold Project between SML and MCC, China, effective from November 1, 2022 to October 31, 2037 and approve the attached addendum. No. 4 (Annex-TX of the summary) to the Lease Agreement to be signed by SML Management with MCC.
The Petroleum Division informed the forum that efforts have been made to bring transparency and increase the visibility of the government by forming an oversight committee. In addition, better terms and conditions were agreed through lengthy negotiations. This would improve the profits of the GoP in the future due to the improved share.
The chairman of the CPEC authority stated that there may be hidden costs in operation and maintenance and this may have reduced the government’s share/benefits. He suggested hiring a professional person or firms to ensure that expenses are accounted for fairly.
Petroleum responded that the concept of an oversight committee was specifically added to the contract for this purpose.
The Minister of Finance endorsed the advice and ordered an annual review by experts/companies to bring transparency to the operation of the company.
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Advisor to the Prime Minister for Trade and Investment, Abdul Razak Dawood said the lease term should be reduced to ten years from fifteen years as the previous lease was also for ten years. The Oil Division responded that any changes to the terms and conditions at this stage could jeopardize the entire transaction; therefore, it is not recommended.
The Finance Division observed that, in accordance with practice, either the finance secretary or his representative are included on the boards of public limited companies, but in this case the economic adviser of the finance division was included in the council. They suggested a review and the views of the Finance Division were endorsed by the President.
After detailed discussion, the ECC further requested the Petroleum Division to conduct a financial review of the project annually by an expert/company, to ensure transparency of the project.
The ECC also decided that the finance secretary or his representative should be included in the board of directors as a representative of the finance division instead of the economic adviser.
Copyright Business Recorder, 2022