ISLAMABAD: The federal government is to exempt LPG spot cargoes from November 2022 to March 2023 from PPRA rules meant to allow SSGC LPG Limited (SLL) to procure approximately 20,000 MT LPG per month, well informed sources told Business Recorder.
Sharing the details, sources said, Ministry of Energy (Petroleum Division) in a letter of September 30, 2022 requested Public Procurement Regulatory Authority (PPRA) to allow exemption to SSGC-LPG (Pvt.) Limited for minimum time period required under PPRA Rules 13(1) and Rule 35 for procurement of LPG cargoes of approximately 100,000MT from November, 2022 to March, 2023 and procure additional 100,000 LPG cylinder to market this additional Volume of LPG.
Ministry has forecast a substantial shortfall of natural gas in upcoming winter season and directed SLL to arrange to import at least 100,000 MT LPG from November 2022 to March 2023 which is approximately 20,000 MT per month and procure additional 100,000 LPG cylinders to market this additional volume of LPG.
According to sources, SLL submitted that they have engaged with new international suppliers who can supply the required quantities on monthly basis preferably on spot prices to get the market competitive rates.
The latest tender was opened on September 16, 2022, whereas new international supplier was confused in quoting LPG price because if he were to be declared as most advantageous bidder the purchase order would have been issued on October 01 2022 and LPG prices cannot be predicted. Due to extreme volatility in spot LPG market, SLL is facing challenges to procure LPG from the spot market given applicability of PPRA rules specially rules 13 (1) and 35 of PPRA rules, 2004.
Petroleum Division has requested exemption to SLL from applicability of rules 13(1) and 35 of PPRA Rules, 2004 for procurement of LPG spot cargoes from Nov, 2022 to March 2023 for approx. 20,000 MT per month.
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Keeping in view the LPG international scenario, and in the larger national interest, Petroleum Division proposed the following for consideration of the PPRA Board: (i) SLL may be granted exemption under Section 21 of PPRA Ordinance, 2002 from applicability of Rule 13 (1) of Public procurement Rutes-2004, for the procurement of LPG spot cargoes from November 2022to March 2023 for approx. 20,000 MT per month to the extent of relaxing the duration of response time.
However, the Procuring Agency shall ensure publication of the invitation to bid in widely circulated Urdu and English Newspapers; and (ii) SLL may be granted exemption under section 21 of PPRA Ordinance, 2002 from applicability of Rule 35 of public procurement Rules-2004, for the procurement of LPG spot cargoes from Nov, 2022 to March 2023 for approx. 20,000 MT per month to the extent of relaxing the period between the announcement of evaluation report and award of contract to the successful bidder, subject to the condition that fair and reasonable opportunity shall be provided to ensure the healthy competition amongst the potential bidders and to ensure the Redressal of Grievance of the aggrieved bidders, if any.
According to SLL, it normally gets the maximum bid validity from suppliers against the industry norm, the provision of 15 days waiting period from results announcement till the award of contract has the following consequences: (i) due to upward price trend, there are events where suppliers refused to supply LPG by the time of award of contract; (ii) because of the time involved especially in the issuance of purchase order, international LPG suppliers normally hesitate to participate in SLL tenders;(iii) bidders normally quote high prices to participate in SLL to cover their price risk ; and (iv) an LPG vessel normally takes 10 days from loading till voyage to discharge port, i.e., Port Qasim but SLL would need a vessel after every seven days.
SLL maintains that in managing the supply chain cargoes and to acquire the related equipment like cylinders, etc., especially in conditions where demand and supply of gas is the most crucial factor, any disruption in supply chain of LPG and related equipment like cylinders etc. may worsen the situation of shortage of gas much further, particularly in upcoming winter season.
The company further argues that the arrangement of on time LPG cargoes and cylinders to overcome the upcoming shortage can be managed if the 15 to 30-day period from the advertisement to the bid submission dates be reduced to 3 days to enable SLL to speed up the process.
Copyright Business Recorder, 2022
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