20,000MT per month from Apr to Sep: Buying LPG spot cargoes exempted from PPRA rules

ISLAMABAD: The Federal Cabinet has exempted procurement of 20,000 MT Liquefied Petroleum Gas (LPG) cargoes on the spot per month from PPRA Rules 2004 from April to September 2023.

At a recent meeting of the PPRA Board, the Managing Director of PPRA stated that recommendations of the Board regarding the purchase of LPG spot along with draft summary were forwarded to Cabinet Division to seek approval of the Federal Government.

Subsequently, Federal Cabinet considered the summary and granted exemption to Sui Southern Gas Company LPG Pvt Ltd (SLL) from applicability of Rules 35 and 40 of public procurement Rules, 2004 for the Procurement of LPG spot cargoes from April 2023 to September 2023 for approximately 20,000 MT per month.

Accordingly, PPRA, in a letter of June 14, 2023 conveyed decision of Federal Cabinet to Ministry of Energy (Petroleum Division) and SLL.

Spot LPG cargoes: Govt decides to exempt SLL from PPRA rules

Ministry of Energy (Petroleum Division) in its letter of April 5, 2023 requested PPRA to grant exemption to SSGC LPG Ltd. (SLL) from Rule 35 & 40 of PP Rules, 2004 for the import of LPG spot cargoes from April 2023 to March 2024 (approx.) - 20,000 MT LPG, i.e., four cargoes per month.

SSGC LPG Pvt. Limited stated that in September 2022, Ministry of Energy (Petroleum Division) had given a task to both the SSGC (through its subsidiary SLL) and SNGPL to import additional LPG during winter season from November 2022 to March 2023 to overcome severe gas shortages in Pakistan.

SLL in response imported 67,771 MT LPG during last winter season (due to exemption provided from Rules 8, 9, 13(1), 35 & 40 of PP Rules, 2004).

Petroleum Division maintains that regular LPG supplies to the local market not only helped avoid the artificial shortage of the product but also maintained that LPG prices were well within OGRA announced limits.

The sources said, SLL further submitted that LPG prices, locally, as well as, internationally, are vulnerable and change on a daily basis. Following are the benefits of the exemptions allowed to SLL from PPRA Rules, 2004: (i) exemption from Rule-35, of PP Rules, 2004, gave SLL an opportunity to procure LPG from international suppliers at par with the private importers as it reduced the risk of price change for both SLL and the international suppliers; and (ii) exemption from Rule-40 of PP Rules, 2004, provided an opportunity for SLL to get the market competitive prices from these suppliers.

The sources further stated that SLL with the help of existing exemptions saved around $918,600 amounting to around Rs222 million in 12 consignments during last winter season. In this regard, SSGC LPG Pvt. Limited stated that in order to import LPG smoothly and cost-effectively, SLL needs to remain at par with the private importers.

SLL, with the help of the exemptions of Rules 35 & 40of PP Rules, 2004, will be able to continue the uninterrupted supply to the local market to avoid product shortages and keep LPG prices well within OGRA announced prices.

Ministry of Energy (Petroleum Division) highlighted the fact that the dependence on LPG imports is/ will keep rising in future due to increasing demand coupled with reduction in local LPG production due to depleting local oil & gas fields. In this regard, Ministry supported the stance of SSGC LPG Pvt. Limited.

Petroleum Division, in its summary to the PPRA, stated that in accordance with section 21 of the PPRA Ordinance, 2002, on the recommendation of the PPRA Board (66th meeting held on October 10,2022), the Federal Government on October 19, 2022, granted exemption to SSGC LPG (Pvt.) Limited (SLL) from applicability of Rules 8, 9, 13(1), 35 and 40 of the PP Rules, 2004 for import of LPG Spot Cargoes from November 2022 to March 2023 for approx. 20,000MT per month.

Copyright Business Recorder, 2023