Law ministry sticks to its guns over $20 billion LNG deal

Deal indefensible as govt officials confess to irregularities in awarding contract.

ISLAMABAD: The law ministry has denounced the petroleum ministry’s preference for awarding a $20billion LNG contract to the transnational consortium GDF-Suez.

Officials in the law ministry issued the second consecutive legal opinion damning the deal favoured by the petroleum ministry. The stakes are high as is evident from the fact that lawyer SM Zafar was engaged for Rs7 million to defend the petroleum ministry’s decision to award the contract to the Franco-American consortium, GDF-Suez. This is an unusual precedent for any government institution.

The bid to convince the Economic Coordination Committee (ECC) members to uphold the opinion given by the associate of a private firm in disregard of the law ministry’s objections, whose mandate it is to scrutinise deals before their execution, fell through.

Disappointed with the law ministry’s verdict, petroleum ministry officials considered winning over Attorney General of Pakistan Moulvi Anwarul Haq to their side, bypassing the relevant ministry.

Ali Zafar, SM Zafar’s son was also paid millions of rupees in legal fees by Sui Southern Gas Corporation, party to the SC case, to defend the controversial deal along with his father. The deal turned out to be indefensible when government officials confessed to irregularities committed in the award of the contract.

The law ministry has snubbed officials in the petroleum ministry for harping on the 20 year old deal for the last nine months and pointed out that the deal would have been finalised by now had the ministry re-advertised the contract to ensure transparency in accordance with the April 28 Supreme Court judgment.

The American Carlyle group, best known for its ties with former US president George Bush, is one of the stakeholders in the $20 billion LNG deal. The news made it practically impossible to justify the deal. The group was fined $20 million in New York in 2009 for bribing politicians and government officials to acquire a $740 million pension fund deal. Law minister Dr Babar Awan, was under tremendous pressure from the government to oblige petroleum minister Naveed Qamar and drop his opposition to the official summary recommending the Franco-American consortium for the contract, say sources. In a new reference, the law ministry was advised to get a second opinion in the light of SM Zafar’s stance. He had written that the new summary sent to the ECC for awarding the contract to GDF-Suez was in line with the Supreme Court’s orders, according to official documents available with The Express Tribune. French and American diplomats banded together to dissuade Dr Babar Awan from insisting on a fresh bid.

The law ministry, rejected the lawyer’s stance and wrote that “there was no document available on record which could support the proposals put up by the ministry, hence with respect, the proposal of the ministry of petroleum and natural resources is not confirmed and this division is of the view that the proposal for initiation of the new process ... in observance of PPRA rules in the strict sense is the spirit of the judgment of the Supreme Court of Pakistan.”

Bandying references back and forth between the two ministries came to an end after the law ministry concluded that ‘after taking into account all the relevant documents furnished by the referring division, there is no scope for reviewing or dislodging this division’s earlier opinion’.

Published in The Express Tribune, January 2^nd, 2011.