LNG import: NAB clears Sui gas company of corruption charges

Watchdog finds nothing inconsistent with rules and regulations.

ISLAMABAD:

The National Accountability Bureau (NAB) has cleared Sui Southern Gas Company (SSGC) of allegations of corruption in award of multi-billion-dollar liquefied natural gas import project, saying it has found “nothing inconsistent with rules and regulations in the process”.

NAB – the accountability watchdog – gave the clean chit after a presentation on LNG import arranged by NAB’s Sindh chapter on instructions from the headquarters, says a letter sent by NAB Sindh to SSGC Managing Director Zuhair Siddiqui.

In the presentation held on April 5 this year, SSGC dismissed charges of ignoring the lowest bid for LNG import and presented key documents to strengthen its position. The documents included press advertisement for inviting bids, extension in bid submission date, Request for Proposal (RFP) documents along with three amendments, technical bid opening sheet, price bid opening sheet and technical evaluation report of a consultant.



NAB evaluated these documents and later the headquarters sent a letter dated March 18 addressed to SSGC and highlighting some discrepancies and subsequent reply to NAB Sindh, which minutely reviewed it in light of the presentation made on April 5 and documents provided by SSGC.

“In this office’s considered view nothing inconsistent with rules and regulations has been observed in the process carried out so far. There is no need to reinitiate the tendering process,” NAB Sindh’s letter said.

It further said the matter was sub judice in the wake of a suo motu case in the Supreme Court of Pakistan and further action may be taken in light of the court’s decision.

In the tender, SSGC sought bids for import of 400 million cubic feet of LNG per day in a 15-year gas sales agreement to be awarded to the lowest bidder. Three bidders submitted financial bids, which were opened on March 5 at SSGC office in Islamabad and were evaluated by the company and its consultant.

In line with a decision of the Economic Coordination Committee taken on October 10 last year, SSGC sought proposals for supply of 400 mmcfd of LNG in the second phase. Technical bids were opened on February 12 and evaluated in London by an SSGC team, international consultant QED and one of the members of an ECC sub-committee.

In the Request for Proposal sent by SSGC to all bidders, the company made it clear that there was no scope for adding elements to the formula set out in the draft (gas sales agreement).

Despite clear-cut instructions to offer a single-line price based on the scientific formula provided, Elengy Terminal Pakistan Limited (ETPL) made a five-line conditional offer, said SSGC officials.

Apart from this, ETPL cited the Henry Hub index as well as the Brent rate. Brent-based price, required in the Request for Proposal, was the lowest at $17.618 per million British thermal units. The price, based on Henry Hub formula, was even lower at roughly $16.56 per mmbtu. But the evaluators did not consider this price.

Global Energy International Pakistan (GEIP) offered a price of $18.16 per mmbtu and Pakistan Gasport Limited (PGPL) bid $17.7074 per mmbtu. So far, the contract for import has not been awarded to any of the bidders.

Published in The Express Tribune, May 23^rd,  2013.

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