Ministry for go-ahead on $25b LNG import project
24 January, 2013
ISLAMABAD: Despite the ECC body on Tuesday reached consensus that acceptance of two controversial bids would be violation of PPRA rules, petroleum ministry was going to press Cabinet's Economic Coordination Committee (ECC) to clear these bids to go ahead on $25 billion LNG import project.
ISLAMABAD: Despite the ECC body on Tuesday reached consensus that acceptance of two controversial bids would be violation of PPRA rules, petroleum ministry was going to press Cabinet's Economic Coordination Committee (ECC) to clear these bids to go ahead on $25 billion LNG import project.
However, petroleum ministry would ask economic body to reject all three bids and re-initiate the process,” sources close the development said, adding, that Sui Southern Gas Company (SSGC) may re-tender the project to ensure transparency in awarding contract.
An ECC's subcommittee meeting to discuss Liquefied Natural Gas import project under chair its Convener Dr. Asim Hussain failed to take any final decision regarding award of the contract due to a controversy among the bidders. Dr Asim said meeting, however, asserted to urgently complete the process to minimize the gap between supply and demand and also said that the process should be completely transparent and as per PPRA Rules. Sources aware of the matter told The Nation that this LNG import project would meet with the same fate as was happened with earlier Mashall LNG import project due to illogical and irrational interference by petroleum ministry in bidding process. In Mashall LNG import project, Dr Asim had interfered and directed SSGC to invite bids for short term LNG import project that caused controversy,” sources added.
They said owing to its inefficiency and inability coupled with lack of seriousness towards the import of LNG to the country, ministry of petroleum and natural resources would finally stall this project.
However, the petroleum ministry in a bid to save its skin has now resolved to shift the burden on the shoulders of Cabinet's economic coordination committee (ECC) by seeking its approval regarding the LNG import project and the award of contract as well, sources said. It seems that this third attempt of the incumbent government to bridge the demand supply gap would met with a complete failure and would not be a success story owing to out of way interference of petroleum ministry in the bidding process to benefit blue eyed in the sector, sources opined.
How dirty business is at hand of Petroleum Ministry who waived off the condition of past LNG import experience to qualify for the $25 billion LNG import project, a move to find a way for adjusting the traders.
It is alarming for anyone that how the brokers would deal with the business of LNG imports who had no past experience.
“If the condition is made mandatory for past experience of LNG business, the existing three parties would kick out of the project,” sources said adding that SSGC has invited another tender of 400 mmcfd LNG import which would also hit snags.
An integrated LNG import project that was to bring in 400 million cubic feet per day (mmcfd) of the fuel is already facing poor response from the international bidders as only three parties participated in bid process, which are already working in Pakistan. These parties include PGPL, GEI and ETPL, which surprisingly don't have worthwhile previous experience in dealing with LNG projects. The bids were opened on January 9, 2013 despite request of International parties to extend bidding date due to Christmas and New Year holidays in Europe. The PGPL submitted $14/mmbtu, ETPL $17/mmbtu and GEI $16/mmbtu in their respective bids, sources said. The PGPL Consortium and the GEI, bids appear to be challengeable as non-responsive and there remains only one bid of ETPL.
“If government gives contract through single bid to ETPL, it will be challengeable under PPRA rules due to lack of competition,” sources said adding that the PGPL Consortium submitted its bid approximately fifteen (15) minutes after the deadline which other bidders had challenged it terming it non-responsive. Official in the PGPL Consortium has reportedly said that this delay was on the basis of an electronic message received from an official of SSGCL that the bid could be filed by 5 p.m. rather than the earlier announced 4 p.m on January 9.
PGPL said that the bid submitted by Global Energy Infrastructure Pakistan (Private) Limited (GEI) is “non-responsive” because it did not meet the requirements of the bidding documents and submitted bid bond amount less than one million dollars required to qualify for the project.
Sources said that PGPL had written a protest letter against GEI bid terming it non-responsive and demanded that its bid should be rejected.
“Now the best option is to reject all bids (in accordance with Rule 33 of the Public Procurement Rules, 2004 and re-invite tenders for bidding (in accordance with Rule 34 of the Rules) to ensure transparency through competitive bidding,' an official of SSGC said.
SSGC had opened a bid of 400 million cubic feet per day LNG import project on January 9, 2013 and only three firms had participated it. Under this project, government wants to award 400 mmcfd LNG import project for fifteen years supply and price will be reviewed after five years. SSGC has sought bids for another 400 mmcfd LNG import project.
According to a protest letter written to SSGC on January 10, 2013, PGPL said that $1 million amount of bid bond was to be deposited by converting into Pakistan rupee using the official exchange rate of National Bank of Pakistan/ State Bank of Pakistan on the date of opening bid. The official exchange rate of rupee was 97.30 and SBP was rupee 97.33 equal to $1.
While referring to the bid bond amount deposited by three bidders including GIE, PGPL and ETPL shown in bid opening sheet, PGPL said that GEI deposited Rs 97,200,000 ($998,972.25 NBP-$998,646.89 SBP exchange rate), ETPL Rs 97,590,000 ($1,002,980.47 NBP-$1,002,653.81 SBP exchange rate), PGPL Rs 98,000,000 ($1,007,194.24 SBP-$1,006,866.21SBP exchange rate).
When contacted an official in GEI, he said that they maintained account in National Bank of Pakistan (NBP) and had given the framework of $1 billion bid bond amount to issue it. He said that Global Energy had already invested $17 million in Pakistan to pursue LNG import project in a bid to overcome energy crisis.
When contacted a senior official of SSGC, he confirmed that minor lapses were in bids of both parties including GEI and PGPL and matters would be tabled before ECC for advice.
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