KPOGCL Policies

POLICY & PROCEDURES

Policy Summary

It is the firm policy of the Khyber Pakhtunkhwa Oil & Gas Company Limited (herein called “KPOGCL”) to identify Conflicts of Interest (herein called “COI”) involving KPOGCL and related parties, as well as to identify situations which may give rise to the appearance of a Conflict of Interest, and to address such Conflicts and situations in a manner that will fully protect the integrity, reputation, time, efforts and funds of the KPOGCL and related parties. This COI Policy was approved by the Board of Directors in the 17^th Board Meeting.

This Policy is issued dated 17-March-2017. It is applicable on all Directors of the Board and Employees.

Article I: Purpose of this Policy

The purpose of this Conflict of Interest policy is to protect KPOGCL’s Interests when it is contemplating to enter into any transaction, agreement, contract, arrangement or other work that might benefit the private Interest of a Director (Board of Director), or Employee that might result in a possible excess benefit transaction or may give the appearance of undue influence from outside parties. This policy is intended to supplement but not replace any applicable Provincial and/or Federal laws governing and in vogue. A panel under the CEO, assisted by CFO shall ascertain applicability of COI to a transaction. A report shall be submitted to BOD every six months.

Article II: Definitions

1. Conflict of Interest

A “Conflict of Interest COI” arises when a Person in a position of authority in an organization, such as a Director, manager, key officer, management staff, non-management staff, expert, volunteer, consultants and alike may benefit Personally from a decision he or she could make.

2. Interested Person

Any Director, principal officer, committee member or senior staff Person with delegated powers, who has a direct or indirect financial Interest, as defined below, is an Interested Person.

3. Financial Interest

A Person has a financial Interest if the Person, directly or indirectly through business, investment or family has:

1. An ownership, partnership, directorship (excluding independent directorships), shareholding or investment interest in any entity with which the Company has a transaction or arrangement, however any prior ownership, partnership, shareholding or investment created 6 months prior to joining KPOGCL shall not construed COI.

1. A compensation arrangement with the Company or with any entity or individual with which the Company has a transaction or arrangement. Compensation includes direct and indirect remuneration, as well as gifts or favors that are not insubstantial, such as:

• Consultancy – any consultancy, directorship fee (excluding independent directorship), position in or work which attracts regular or occasional payments in cash or kind,

• Fee-paid Work – any work commissioned for which the member is paid in cash or in kind,

• Shareholdings – any shareholding in or other beneficial Interest in shares. (This does not include shareholdings through unit trusts or similar arrangements where the “Interested Person” has no influence on financial management).

1. A potential ownership or investment Interest in, or compensation arrangement wit, any entity or individual with which the Company is negotiating a transaction or arrangement.

A financial Interest is not necessarily a Conflict of Interest under Article III, Section 2, when a Person who has a financial Interest may have a Conflict of Interest only if the governing Board or appropriate committee decides that a Conflict of Interest exists.

4. Research Awards

Interested Person shall avoid situations of possible Conflict of Interest in the recommendation of contracts, agreements or grants to other institutions where s/he has Interest.

Article III: Procedures

1. Distribution of Policy and Procedures

Annually a Disclosure Statement shall be furnished to and completed by each Director, officer, committee member and senior staff member. Any new directors, officers, committee members or senior staff shall be advised by the Compliance Officer (CFO) of this Policy and furnished a disclosure statement upon undertaking the duties of such office.

2. Duty to Disclose

In connection with any actual or possible Conflict of Interest, an Interested Person must disclose the existence of the Financial Interest and be given the opportunity to disclose all material facts to the Board members or members of committees considering the proposed transaction or arrangement. The KPOGCL’s Disclosure Statement (Form XXXX) shall be provided for this purpose to the Interested Person.

3. Determining Whether or Not a Conflict of Interest Exists

After disclosure of the Financial Interest and all material facts, and after any discussion with the Interested Person, he/she shall leave the Board or committee meeting while the potential of a Conflict of Interest is discussed and determined. The remaining Board or committee members shall decide if a Conflict of Interest exists. The minutes of the meeting shall note that this procedure was followed and the group’s determination.

4. Procedures for Addressing the Conflict of Interest

1. An Interested Person may make a presentation at the Board or committee meeting, but after the presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible Conflict of Interest.

1. After exercising due diligence, the Board or committee shall determine whether the Company can obtain, with reasonable efforts, a more advantageous transaction or arrangement from a Person or entity that would not give rise to a Conflict of Interest.

1. If a more advantageous transaction or arrangement avoiding a Conflict of Interest is not reasonably possible under circumstances, the Board or committee shall determine by a majority vote of the “dis-Interested directors” or members, whether the transaction or arrangement is in the Company’s best interest, for Company’s own benefit, and whether it is fair and reasonable. In conformity with the above determination, the BOD shall make its decision as to whether to enter into the specified transaction or arrangement.

1. In the case of research awards, the member of any institution to which a grant is to be considered shall retire from the room during the course of the discussion, shall not participate in the deliberation nor vote on the matter.

5. Violations of the Conflict of Interest Policy

1. If the Board, committee or Compliance Officer has reasonable cause to believe a member has failed to disclose actual or possible Conflicts of Interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose.
2. Employees must notify their direct supervisor of any actual or potential conflict of interest situation and obtain a written ruling as to their individual case. The CEO shall give ruling on employees in breach of COI. In case of Directors, such ruling can only be given by the Board, and will be disclosed to the shareholders.

1. If, after hearing the member’s response and after making further investigation as warranted by the circumstances, the Board, Committee or CEO determines that the member has failed to disclose an actual or possible Conflict of Interest, s/he shall be given 15 working days to appeal and/or remove the Conflict of Interest as determined by the BOD, Committee or CEO thereafter BOD, Committee or CEO shall take appropriate disciplinary and corrective action.

Article IV: Records of Proceedings

The Minutes of the Board meeting and all committee meetings, where such Conflicts have arisen shall contain:

1. The names of the Persons who disclosed or otherwise were found to have an actual or possible Conflict of Interest, the nature of the Financial Interest or other Conflict, any action taken to determine whether a Conflict of Interest was present, and the Board’s or committee’s decision as to whether a Conflict of Interest in fact existed.

1. The names of the Persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings.

Corporate Strategy

To enable the Company to attain heights of success through investment in human capital, implementation of lean exploration & production methods, services and commitment to Total Quality and Environment Management, we plan, with the help of Almighty Allah, to establish and expand the newly established company into a world class E & P company and attract local, as well as international investments to penetrate into untapped Oil and Gas reserves with pro-active measures and effective planning, implementation and execution. Our objective is to successfully exploit all the available natural resources for benefit of people of Khyber Pakhtunkhwa in particular and the country at large. We intend to set an example in all dimensions of our entrepreneurial activities. We see ourselves committed to the self-defined models of economic, social, and ecological responsibility, which means not only economic success but also conscientious interaction with our Staff members, people, and the environment.

Our primary objective as a leading Exploration and Production (“E&P”) Company in Pakistan is to enhance our reserves and production profile and, ultimately, to maximize value for our shareholders. In order to achieve this goal, we are seeking to execute the following strategic goals:

• Strive to implement International Best Practice: We strive to implement international best practices which seek to bring about an efficient organizational structure and business processes that are focused on production.

Confidentiality Policy

The Company respects the privacy of data relating to individual persons (whether employees or third parties) which it may hold or handle as part of its information processing activities or otherwise. Employees maintain confidentiality of the Company’s and its customers’ confidential information which is disclosed to them.

The Directors and Employees may not take advantage of the Company’s information or property, or their position

INTRODUCTION

KPOGCL is instituting the following Whistle Blower (herein called “WB”) Policy as a result of requirements of Code of Corporate Governance-2013. KPOGCL has always had an informal open door policy for all Directors, employees, contractors and other stakeholders to discuss all matters pertaining to the operation and reporting of activities of KPOGCL.

Employees of entities are often the first to realize that there may be something seriously wrong with an organization. However, they may decide not to express their concerns because they feel that speaking up would be disloyal to their colleagues or to the organization. They may also fear harassment or victimization by the management. In these circumstances, they may feel it would be easier to ignore the concern rather than report what may just be a suspicion of malpractice or malafide.

This Policy document for KPOGCL makes it clear that employees can do so without fear of victimization, subsequent discrimination or disadvantage. This Whistle Blowing Policy is intended to encourage and enable employees to raise serious concerns within KPOGCL rather than overlooking a problem or seeking a resolution for the problem outside KPOGCL.

This Policy applies to all Directors and employees and those contractors working for KPOGCL. It is also intended to provide a method for other stakeholders (suppliers, customers etc.) to voice their concerns regarding KPOGCL’s business conduct.

The Policy is also intended as a clear statement that if any wrongdoing by KPOGCL or any of its employees or by any of its contractors or suppliers is identified and reported to KPOGCL, it will be dealt with expeditiously and thoroughly investigated and remedied. KPOGCL will further examine the means of ensuring that such wrongdoing can be prevented in the future.

What is Whistle-blowing?

Whistle-blowing can be described as giving information about potential illegal and/or underhanded practices i.e. wrong doing.

What is wrong doing?

Wrong doing involves any unlawful or illegal behavior and can include:

1. An unlawful act whether civil or criminal;
2. Breach of or failure to implement or comply with any published KPOGCL policy;
3. Knowingly breaching mandatory federal or provincial laws or regulations;
4. Unprofessional conduct;
5. Questionable accounting practices;
6. Dangerous practice likely to cause physical harm/damage to any person/property;
7. Failure to rectify or take reasonable steps to report a matter likely to give rise to a significant and avoidable cost or loss to KPOGCL;
8. Abuse of power or authority for any unauthorized or ulterior purpose; and
9. Unfair discrimination in the course of employment or provision of services.

This list is not definitive, but is intended to give an indication of the kind of conduct which might be considered as “wrong doing”. Minor deviations shall construed “wrong doings”.

Who is protected?

This Policy is set in the context of the statutory provisions of Public Sector Companies (Corporate Governance) Rules, 2013. Any employee who makes a disclosure or raises a concern under this Policy will be protected if the employee:

• Discloses the information in good faith;
• Believes it to be substantially true;
• Does not act maliciously or make false allegations; and
• Does not seek any personal or financial gain.

Who should the Whistle Blower (WB) contact?

Anyone with a complaint or concern about KPOGCL should try to contact their supervisor or manager responsible for the area which provides the relevant service. This depends however, on the seriousness and sensitivity of the issues involved and who is suspected of malpractice and therefore contact CEO directly. CEO Email and Cell numbers shall always be publically known.

How will KPOGCL respond?

KPOGCL will respond positively to the concerns of the complainant.

Where appropriate, the matters raised may:

• Be investigated by management, the Board of Directors, or through a disciplinary process;
• Be referred to the external auditor.

In order to protect individuals and those accused of misdeeds or possible malpractice, initial enquiries will be made to decide whether an investigation is appropriate and, if so, what form it should take.

Some concerns may be resolved by agreed action without the need for investigation. If urgent action is required, this will be taken before any investigation is conducted.

Within 30 calendar days after a concern is raised, the person contacted or a representative thereof will write to the complainant:

1. Acknowledging that the concern has been received;
2. Indicating how they propose to deal with the matter;
3. Giving an estimate of how long it will take to provide a final response;
4. Telling the WB whether any initial enquiries have been made; and
5. Telling the WB whether further investigations will take place and if not, why not.

The amount of contact between the persons considering the issues and WB will depend on the nature of the matters raised, the potential difficulties involved and the clarity of the information provided. If necessary, KPOGCL will seek further information from the WB.

KPOGCL will take steps to minimize any difficulties which WB may experience as a result of raising a concern. For instance, if WB are required to give evidence in criminal or disciplinary proceedings, KPOGCL will arrange for the WB to receive advice about the procedure on best effort basis.

KPOGCL accepts that WB shall be assured that the matter has been properly addressed. Thus, subject to legal constraints, we will inform WB of the outcomes of any investigation.

TIME SCALE

Concerns will be investigated as quickly as possible. It should also be borne in mind that it may be necessary to refer a matter to an external agency and this may result in an extension of the investigative process. It should also be noted that the seriousness and complexity of any complaint may have an impact upon the time taken to investigate a matter. A designated person will attempt to indicate at the outset the anticipated time scale for investigating the complaint.

PREVENTION OF RECRIMINATIONS, VICTIMIZATION OR HARASSMENT.

KPOGCL will not tolerate any attempt on the part of anyone to apply any sanction or detriment to any person who has reported to KPOGCL a serious and genuine concern that they may have concerning an apparent wrong doing.

CONFIDENTIALITY AND ANONYMITY

KPOGCL will respect the confidentiality of any whistle-blowing complaint received by KPOGCL or Government of KP. However, it must be appreciated that it will be easier to follow up and to verify complaints if the complainant is prepared to give his or her name publically. In addition, confidentiality cannot be maintained if such confidentiality is incompatible with a fair investigation or if there is an overriding reason for identifying or otherwise disclosing the identity of the person making the complaint, or if disclosure of the identity of the complainant is required by law.

In the event that anonymity is requested the person should contact supervisor, manager or CEO by phone or email, who will give a case number and a time or times when he or she can call back for updates on the investigation of his or her complaint.

FALSE AND MALICIOUS ALLEGATIONS

KPOGCL is proud of its reputation of adhering to high standards of honesty. It will therefore ensure that resources are put into investigating any complaint which it receives. However, it is important to realize that KPOGCL will view very seriously any allegations which prove not to be substantiated (unless made in good faith pursuant to this Policy) or which prove to have been made maliciously or knowing them to be false.

KPOGCL will regard the making of any deliberately false or malicious allegations by any employee of KPOGCL as a serious disciplinary offence, which may result in disciplinary action including dismissal for cause and pursuing civil remedies.