Govt eases rules for LNG import

Relaxation sought for import of 15 LNG cargoes till December

ISLAMABAD:

The government has relaxed rules for two state-run companies; Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL), to import 15 cargoes of Liquefied Natural Gas (LNG) till December.

Earlier, PLL had struck the most expensive LNG deals on spot purchases that had led to a controversy.

During the last two bids, PLL scrapped LNG tenders and after just a few days, accepted bids from the bidders at higher rates. PLL had cancelled a bid of Vitol of LNG cargo at $11.66 per mmbtu on June 2, 2021. PLL cancelled this tender and re-invited bids, then, a few days later accepted a bid from the same company at $12.7 per mmbtu with a difference of $1.11, putting additional burden of Rs540 million on the consumers.

In another bidding round, PLL had invited eight bids for delivery for September and October. It had received four bids from Qatar Petroleum at $13.79 to $13.99 per mmbtu. Other bids touched $16 per mmbtu. However, PLL cancelled the same tender and re-invited bids a few days later. In response, it accepted four spot LNG bids ranging in between $15.2 to $15.5 per mmbtu.

Through this PLL gave undue benefit worth millions of dollars due to manipulation of Public Procurement Regulatory Authority (PPRA) rules at the cost of the consumers.

The dust of controversial deals by PLL has not yet settled and the government has given exemptions to PLL and PSO. The summary, in this regard, was tabled before the cabinet in its last meeting.

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The Cabinet Division informed that the Ministry of Petroleum requested PPRA for grant of partial exemption from applicability of procurement rules for spot procurement of three cargoes of LNG by PSO and spot procurement of 13 LNG cargoes by PLL till December 31, 2021 in the national interest.

The PPRA Board, in its 53rd meeting held on August 12, 2021, directed the PPRA management to recommend exemption to PSO and PLL.

The board’s decision was, “PSO and PLL may be granted partial exemption under section 21 of the PPRA Ordinance, 2002 from applicability of rule 13 and 35 of Public Procurement Rules, 2004 for the procurement of LNG through spot procurement of three cargoes for PSO and 13 cargoes for PLL till December 31, 2021 to the extent of relaxing the duration of response time to three days and reasonable period between the announcement of evaluation report and award of contract to the successful bidder, subject to the condition that; fair opportunity shall be provided to potential bidders and to ensure redressal of grievance, if any. If the Petroleum Division needs procurement of additional cargoes during this period ie before December 31, 2021 it will bring the case to PPRA again.”

Section 21 of the PPRA Ordinance, 2002 stipulates that the authority may, for reasons to be recorded in writing, recommend to the federal government that the procurement of an object or class of objects in the national interest be exempted from the operation of this ordinance or any rule or regulation made there under or any other law regulating public procurement and the federal government on such recommendations shall exempt the aforesaid objects or class of objects from the operation of the laws and rules and regulations made thereunder.

In view of the foregoing, it was proposed that the federal government may consider grant of partial exemption under Section 21 of the PPRA Ordinance, 2002 from applicability of the Rules 13 & 35 of Public Procurement Rules, 2004 to PSO and PLL.

In this regard, approval of the federal cabinet was solicited to the proposal. The cabinet considered the summary and accorded its approval.

Published in The Express Tribune, September 24^th, 2021.

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