NAB starts probing LNG imports from Qatar

Investigators visit head offices of PSO and SSGC, seize relevant record

ISLAMABAD: As Pakistan Peoples Party (PPP) bigwigs like former petroleum minister Dr Asim Hussain face charges of corruption, the National Accountability Bureau (NAB) has started probing the import of liquefied natural gas (LNG) from Qatar by Pakistan State Oil (PSO), officials say.

Though Pakistan and Qatar have not signed any LNG supply deal, PSO has bought the fuel from Qatargas on spot-purchase basis.

In the first phase, NAB started investigation into the Engro LNG terminal deal and in the next phase focus has shifted to the purchase of six LNG cargoes by PSO and its sale to consumers.

According to officials, NAB investigators visited head offices of PSO and Sui Southern Gas Company (SSGC) and questioned some officials. They also seized the record pertaining to LNG purchase and its handing at the LNG terminal.

Being a public-sector procuring agency, PSO must strictly comply with the Public Procurement Regulatory Authority (PPRA) rules for LNG import.

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Procurement under the PPRA ordinance requires that due process involving multiple potential suppliers must be followed. No procurement is allowed from only one supplier without giving a fair chance to others through an open and transparent tendering process like that undertaken by PSO for the import of all other products.

“In other words, any procurement process based on a single direct source is a clear violation of PPRA law and such procurement including cargoes imported by PSO from Qatargas is legally null and void and can invite punishment,” an official said.

Under Rule 5 of the PPRA rules read with the 2011 regulations and based on meeting the condition that the procurement of LNG arises from a treaty or accord between governments for the specific purpose of gas import from a specific source, a specific exemption may be sought from the government.

There is a specific licensing requirement under laws of the Oil and Gas Regulatory Authority (Ogra) for LNG marketing and distribution. This requirement has also not been met as PSO has not obtained the licence.

PSO has authority

In response to queries of The Express Tribune, a PSO spokesperson pointed out that the government had decided to import LNG, which was the most effective solution, to tackle the severe shortage of gas in the country and enable power companies to generate electricity at a lower cost.

For this, the spokesperson said, the government, under close monitoring of the Ministry of Petroleum and Natural Resources, tasked PSO in April 2014 with the purchase of LNG.

Various meetings had been held to finalise a tripartite agreement between PSO, SSGC and Sui Northern Gas Pipelines Limited (SNGPL), under which roles, rights and obligations of each company with respect to LNG import, regasification and distribution were being formalised, the spokesperson said.

“This arrangement limits PSO’s role to the import of LNG only and the title being transferred to gas companies for regasification and distribution. As PSO’s role does not include LNG marketing, there is no requirement of any marketing/distribution licence.”

The spokesperson stressed that LNG had been imported through the tender process after placement of advertisements in newspapers in response to which multiple suppliers had submitted bids.

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“The LNG imported was passed on to gas companies for onward distribution to the power sector and other customers.”

Published in The Express Tribune, August 28^th,  2015.

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