Sub-committee report: ‘Underhand dealings’ in LPG extraction contract, quotas

Parliamentary panel establishes foul play in award of contract to Jamshoro Joint Venture Ltd.

ISLAMABAD: A parliamentary committee has established the presence of “violation of rules, underhand dealings and corruption” in the award of liquefied petroleum gas (LPG) extraction contract to Jamshoro Joint Ventures Limited (JJVL) and LPG quotas to 15 other companies without bidding in 2004.

The extraction contract was awarded by the management of the Sui Southern Gas Company (SSGC) and the quotas were allocated by Oil and Gas Development Corporation (OGDC) in 2004. The report was prepared by a sub-committee of the standing committee on petroleum and natural resources. The main committee met on Tuesday under Shaikh Waqas Akram and adopted the sub-committee report while taking some corrective measures including ordering not to further extend the extraction contract to JJVL that is going to mature on February 3, 2011.

The parliamentary sub-committee has recommended the initiation of corruption cases against the responsible officials with a view to “nab the corruption mafia and to nip the evil in the bud”. These officials include the then managing director OGDC, secretary petroleum, managing director SSGC and the members of the board of directors of OGDCL and SSGC.

“The OGDCL management allocated the LPG quota in 2004 without bidding on temporary basis and retaining that arrangement for almost five years is undoubtedly gross violation of rules and smacks of underhand dealings and corruption,” reads a six-page report of the committee.

In case of the LGP extraction plant contract the report reads: “Only one pre-qualified bidder, Jamshoro LPG Joint Venture submitted the bid without a bid bond.” It further states that one of the directors of SSGC showed concern over the bidding and suggested a re-bid instead of awarding the contract to JJVL.

“His request was turned down by the MD,” the report found. “The decision of the SSGC to set up an LNG extraction plant and awarding the contract to the only such pre-qualified bidder who had submitted the bid without a bid bond seems to be lacking transparency and is a negation of rules.”

“If we cannot do anything today then the Supreme Court will take action,” said Shaikh Waqas. He said most of the officials and parliamentarians present in the room were under extreme pressure from certain forces to sabotage the proceedings.

“There were anomalies in the bid offered by JJVL that was why the bid should have been rejected,” said the Managing Director SSGCL Faizullah Abbasi in his testimony to the standing committee. He further admitted that the agreement between JJVL and SSGCL was tilted in favour of JJVL.

Chaudhry Berjees of PML-N, heading the sub-committee, said JJVL was also heard by the sub-committee. “Iqbal Z Ah­mad’s son Faseeh later on invited us to visit the plant site that I in consultation with the other members refused,” said Chaudhry Berjees. He said out of 15 companies that obtained LPG quotas through bribes Iqbal Z Ahmed was the MD of six companies.

Competition Commission of Pakistan (CCP) Chairperson Rahat Kunain said the anti-trust watchdog had imposed a penalty of Rs270 million on JJVL for abuse of its dominant position in the market but the company has obtained a stay order from the Lahore High Court. She said the CCP also stopped SSGCL from automatically extending the LPG contract which is going to lapse on February 3, 2011.

According to a clause of the agreement, the contract will expire on February 3, 2011 but SSGCL will extend it without tendering and on the same rates as of 2004, a clause which makes mockery of competition and transparency, said Sheikh Waqas Akram.

MD JJVL Iqbal Z Ahmad when contacted said the standing committee has not recorded findings against the JJVL. He said he has nothing to do with the 15 companies that obtained the quotas even though his relatives and friends own these companies. Ahmad said the LPG extraction contract was awarded in a transparent manner. On the question of non-submission of millions of rupees of bid bonds he said the bonds were submitted later on.

Published in The Express Tribune, January 19^th, 2011.