Multibillion-dollar project: Government criticised over LNG import deal

Planning commission deputy chairman says the government should consider a short-term deal .

ISLAMABAD:

Planning Commission (PC) deputy chairman Dr Nadeemul Haq has criticised the Pakistan Peoples Party government for awarding a multibillion-dollar LNG import project just a few days ahead of completing its constitutional tenure.

Haq’s criticism comes just days after a sub-committee of the Economic Coordination Committee (ECC) rejected the bid of Elengy Terminal Pakistan Limited (ETPL) for the project. Reportedly, the company’s bid was rejected after it submitted a pricing formula instead of a single price in response to request for proposal (RFP) of the project.

According to sources, ETPL is headed by Imranul Haq, who happens to the PC deputy chairman’s cousin.

When contacted, the deputy chairman confirmed his relations with the ETPL head but maintained it had nothing to do with his criticism against the LNG deal.

“I have my own point of view on the project… the government should have been involved in this business by giving sovereign guarantees,” he said, adding that it should have let the private sector do the business.  Nadeem further contended that the government should strike a short-term deal in place of a 15-year deal since its tenure was about to end.

The controversy on the LNG project is further compounded by the resignation of Waqar Malik as the chairman of the board of directors of Sui Southern Gas Company (SSGC) – a move which sources claim was made in protest against the rejection of ETPL’s bid over the submission of a pricing formula.

Malik is also part of the board of directors for Engro Polymer and Chemicals, an Engro Group subsidiary that owns ETPL, according to the company’s website. This hints at complex situation regarding the LNG import deal, which appears mired in conflicts of interest.

Legal consultants from Vellani & Vellani Advocates defended the rejection of ETPL’s bid. According to them, SSGC, in its RFP for the 400 million mmcfd LNG import project, informed all three bidders – namely ETPL, Global Energy International (GEI) and Pakistan Gas Port Limited (PGPL) – about the formula specified in the gas sales agreement (GSA).  The pricing formula mentioned in the GSA was fixed and the agreement clearly stated that the bidders needed to submit only a base price, they maintained.

While both GEI and PGPL submitted a single price, ETPL submitted its own formula to calculate a base price. Furthermore, the price calculated using the ETPL formula did not conform to the requirements of the RFP, the consultants informed The Express Tribune.

“Therefore, the ETPL bid could be rejected as being non-compliant with the terms of the RFP,” they noted.

The consultants said the ETPL proposal contemplated that the price formula would be negotiated with the selected bidder while inking the GSA. They added this was clearly against what SSGC mentioned in its RFP.

Published in The Express Tribune, March 11^th, 2013.