LNG import project: International parties stay away from bidding process

Sources say the timing of bidding activity prevented participation.

ISLAMABAD:

An integrated LNG import project that was to bring in 400 million cubic feet per day (mmcfd) of the fuel may have hit a snag due to the poor response from international parties. The Sui Southern Gas Company (SSGC) is expected to open bids today, and in the absence of a healthy number of bidders, this may mean that some favoured party will be awarded the $25 billion project contract.

The Economic Coordination Committee (ECC) had earlier approved the import of 800 mmcfd of LNG under a long-term plan to be implemented in two phases. For the first phase, SSGC will open bids for the import of 400 mmcfd of LNG for fifteen years on Wednesday (today).

Sources said that 18 firms had applied for the project, but, due to the unavailability of bidders, only four companies had attended the pre-bid meeting held in London on December 14, 2012. The four companies which attended the meeting are already working in Pakistan to secure the LNG import contract: no new international parties had shown up. The meeting was followed by Christmas and New Year’s holidays.

Sources say another factor that put off investors was the abortive Mashal LNG import project; suspended earlier due to controversies surrounding it.

Our sources also revealed that participating parties had demanded an extension in the bid opening date to February or March 2013 during the pre-bid meeting. The claimed this was necessary for a successful auction due to the extensive documentation required from prospective companies under the Request for Proposals (RFP) issued and the Christmas and New Year holidays.

SSGC had issued a draft of the Gas Sales Agreement (GSA) to bidders on December 20, 2012, to discuss with LNG suppliers at a time when Europe was celebrating Christmas. Bidders say they required time to discuss the draft of the GSA with LNG suppliers, but were unable to do so due to the Christmas and New Year holidays.

However, documents reveal that the proposal was turned down in a meeting held on December 26, 2012. Sources said SSGC had issued a last amendment in the RFP on December 31, 2012, and announced that bids would be opened on January 9 (today). Some existing bidders believe that the move will help some favoured company obtain the multibillion dollar contract for the LNG import project.

When contacted, SSGC Managing Director Zuhair Siddiqui said that the company was bound to open bids within 30 days of inviting proposals according to the Public Procurement Regulatory Authority (PPRA) rules. He also admitted that some parties had demanded an extension in the process, but were nonetheless participating in the opening of bids scheduled on Wednesday (today). He also admitted that only four to five firms had attended the pre-bid meeting in London.

However other sources said that one month was the minimum period required for opening bids under the PPRA rules. They also pointed out that the PPRA rules place great stress on ensuring fair competition in the award of contract, and that the extension in offering bids was not barred under their provisions.

Published in The Express Tribune, January 9^th, 2013.

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