LPG extraction deal: National Assembly body asks not to renew pact between SSGC, JJVL after expiry

National Assembly's Standing Committee on Petroleum & Natural Resources has recommended not to renew the LPG extraction agreement inked between SSGC and Jamshoro Joint Venture Limited (JJVL) after its expiry till the NA body finalises its recommendations.
NA body that met with Sheikh Waqas in the chair in head office of Oil and Gas Development Company Limited (OGDCL) discussed a report of a sub-committee on LPG quota allotted by OGDCL without bidding process in 2004 that continued for five years. Convenor of sub-committee, Barjees Tahir tabled the final report on the matter of distribution of LPG quota among different LPG companies as well as the status of contract between SSGC and JJVL that was unanimously adopted by main NA body on petroleum & Natural Resources after deleting three different paras having political intentions.
Two NA body members Anayat Ali Shah and Nawab Ali Sawan lodged strong protest over including the name of former Benazir Bhutto in sub-committee report regarding LPG allotment cases. Anayat Ali Shah had written a dissenting note to this effect and three paras were deleted from the report.
Committee chairman Sheikh Waqas directed the Competition Commission of Pakistan (CCP) to submit in writing about the application of competition rules on contract between JJVL and SSGC. The Legal Wing of SSGC was also directed to submit a report on the status of agreement in the light of Pakistan Procurement Regulatory Authority (Pepra) rules to judge whether contract should continue or not. The opinion has also been sought about application of Contract Act on agreement.
MD SSGC, Dr Faiz Ullaha Abbasi briefed the committee that SSGC called an international tender for the project of LPG extraction, eleven companies applied for the tender, while six companies qualified for bidding. However, at the end of the day, September 12, 2001 when bid was opened, no one joined the bidding except JJVL, and the contract was awarded to the said company by the Board of Directors of SSGC using its discretionary powers.
MD SSGC said that because the matter was under subjudice in Lahore High Court (LHC), therefore, he is not able to comment or submit any observation over this particular agreement between SSGC and JJVL. Chairman Committee Waqas Akram Sheikh was of the view that under Contract Act 1964, any contract could be Null & Void if any malafide or tilt was found in the agreement.
Chairman CCP Rahat Kunain Hassan informed that CCP order against JJVL and LPG Association of Pakistan (LPGAP) was passed on December 14, 2009 that was challenged before the Lahore High Court and is pending for adjudication. Committee directed the Chairman CCP to bring out the status of agreement in black and white under concerned laws, either the LPG extraction contract between JJVL & SSGC could be continued further or not after its expiry on February 3, 2011.
Managing Director (MD) Pak Arab Refinery Limited (Parco) Rasheed Jang said that in local as well as international practices, bid bond was not much of a requirement for contract. "Board of Directors (BoDs) can give exception if it feels appropriate to do so," Jang added.
Some SSGC officials are of the view that if fresh bids are invited, it will take around one year to commission LPG extraction project. "Now the situation has become complicated because what will happen to LPG loss that SSGC would be facing on account of production and royalty till the new party starts operation," they said. JJVL claims that it had paid Rs 22 billion royalty, to SSGC since March 2005 to November 2010.Gas resources are also depleting and JJVL production has reduced from 500 tons per day to 200 tons per day at present.
According to report, allocation of LPG quota in 2004 by OGDCL without bidding on "temporary basis" and retaining that arrangement for almost 5 years is undoubtedly gross violation of rules and smacks of "underhand dealings and corruption." The then management cannot let go from its responsibilities. The M/o Petroleum & Natural Resources should be directed to initiate corruption cases against the then management in the relevant courts with a view to nab the corruption mafia and to "nip the evil in the bud."
Meanwhile, according to statement, the National Assembly Standing Committee on Petroleum and Natural Resources directed the Ministry of Petroleum and Natural Resources to initiate corruption cases against those officers who were responsible for allocating LPG quota without bidding in 2004 which caused losses of billion of rupees to national exchequer. This direction was given by the Standing Committee in a meeting held on January 18, 2011 in the Committee Room of OGDCL House, Islamabad. The meeting was presided over by Sheikh Waqas Akram, MNA/Chairman of the Standing Committee.
Earlier, the Committee adopted the Report of the Sub-Committee of the Standing Committee on Petroleum and Natural Resources which was constituted to investigate the affairs of distribution and grant of LPG quota to different companies. The Committee also endorsed the recommendations of Sub-Committee wherein the Ministry was directed to pursue Court Cases vigorously regarding the misuse of powers in the grant of the LPG quota, prior to the LPG de-regulation period.
Over the issue of Sui Southern Gas Company Limited's agreement with Jamshoro Joint Venture Limited (JJVL), the Committee decided to convene another meeting on February 2, 2011 to give final verdict. The Committee also constituted three Sub-Committees to review the progress carried out by OGDCL and, SSGCL in those districts, which are producing oil and gas in the country.
The meeting was attended by Nawab Ali Wassan, Mian Abdul Haq alias Mian Mitha, Khurram Jehangir Wattoo, Mir Ahmadan Khan Bugti, Syed Anayet Ali Shah, Sheikh Aftab Ahmed, Muhammad Hanif Abbasi, Rana Muhammad Ishaq Khan, Abdul Waseem, Muhammad Barjees Tahir, Syed Haider Ali Shah: MNAs and Senior Officers of the M/o Petroleum & Natural Resources, OGDC, FARGO, SSGCL, Competition Commission of Pakistan (CCP) and OGRA.