LNG project: Fresh tender despite pressure

After the SC stopped the deal, the law and petroleum ministries had been at odds.

ISLAMABAD: The retendering of a $20 billion Liquefied Natural Gas deal comes despite extreme pressure, from within and outside Pakistan, to re-award the contract to the same firm that was involved in the initial controversial deal.

Key political authorities as well as foreign diplomats were actively lobbying for the deal to be given to the same French-American consortium without fresh bidding in the aftermath of the Supreme Court’s order to cancel the deal after it was found to be laced with incongruities.

As reported earlier, the law ministry had refused to sign off on advice that would see the re-awarding of the contract to GDF-Suez – a move that had the support of the ministry of petroleum.

The petroleum ministry’s position before the Economic Coordination Committee (ECC) was that the Supreme Court did not order fresh tendering in its detailed judgment, so there was no need for fresh tenders. But the law ministry did not agree with this interpretation.

An official confirmed to The Express Tribune that Federal Law Minister Babar Awan did not attend at least half a dozen meetings of the ECC in recent months after the issue became a bone of contention between law and petroleum ministries, as he did not want to deviate from his ministry’s written legal opinion.

Later French and American diplomats also met with Awan to convince him to support the move to give the contract to GDF-Suez again – a consortium that has links with former US president George Bush and half brother of French president Sarkozi.

The sources said that the fresh tender might save Pakistan a few billion dollars as the global prices of LNG have shown a considerable decline since the petroleum ministry had struck a deal with GDF-Suez.

The LNG deal had been stopped by the Supreme Court after top officials of the petroleum ministry, including its special secretary GA Sabari, confessed that GDF-Suez was given the $20 billion contract without having ever participated in the bidding. He had disclosed that the contract was awarded after negotiations, not through bidding as required under the procurement rules.

One insider said that a last-ditch warning by petroleum minister Naveed Qamar in Tuesday’s ECC – that retendering would significantly delay the project – fell on deaf ears. Finance Minister Dr Hafeez Sheikh refused to differ with the legal opinion to re-advertise the contract to ensure “transparency”.

Published in The Express Tribune, January 26^th, 2011.