Emirates National Oil Company (ENOC) has offered Liquefied Natural Gas (LNG) for five (5) years only at 13 percent of Brent crude oil price, under a government-to-government deal, says Transparency International Pakistan. Last month, in a meeting with the Prime Minister Nawaz Sharif, the officials of ENOC made the offer in presence of the Finance Minister Ishaq Dar and Petroleum and Natural Resources Minister Shahid Kahqan Abbasi. They offered a lucrative deal to the PM with a 60-day credit.
Transparency International Pakistan says that the government of Pakistan needs to accept the offer as G2G deals are allowed under the Pakistan Procurement Rules Act (PPRA) and has also been recommended by consultants to Ministry of Petroleum, who expects a further drop in LNG prices as shale gas from Australia is expected in 2018. The letter written by chairman Transparency International Pakistan Sohail Muzzaffar with copies to chairman NAB and others says:
"Transparency International Pakistan refers to PSO reply dated 17.12.2015 of our letter dated 8.12.2015, on the complaint that PSO in order to circumvent the PPRA Rules is to award 15 years LNG import contract to Qatargas at 14% of Brent, which has been negotiated by you in Qatar. PSO has tendered for 5 years LNG import, which is going to open on 10th of December 2015.
Another complaint is received that PSO has negotiated with Qatar Gas the 15 years deal with Qatar Gas at 13.95% of Brent, which has been rejected by ECC on 26.11.2015, not being a G to G treaty. The complainant has also made following allegations on PSO and Ministry of Petroleum;
1. The first four-six cargoes of the re-gasified LNG were imported by PSO on the basis of what a Sindh government official said an "executive order" of the Ministry of Petroleum. A highly-placed official at OGRA confirmed that at least four initial LNG cargoes were brought in without issuing a regular tender under PPRA rules, which has also been objected by PGRA.
2. The Evaluation Report of two tender LNG cargoes of May 2015, and September 2015 in Violation of PPRA requirements are not posted on PPRA website, nor on PSO website.
3. Due to dubious role of PSO by declaring that LNG deal with Qatar Gas has been finalised, serious bidder did not participated in the PSO 5-year tender, in which M/s Gunvor was declared lowest bidder at 13.36% of Brent.
4. In order to facilitate Pakistan Government of UAE delegation of Emirates National Oil Company ENOC has visited Pakistan last month and in a meeting held with the Prime Mister, Finance Minister and Finance Minister, and offered a most lucrative G-to-G deal of LNG at less than 13% of Brent, and also offered a 60 days credit.
In view of above complaint, clarification of PSO vide letter dated 17.12.2015, and Ogra decision of RLNG price determination dated 7.10.2015, following are TI Pakistan''s observations.
A. PSO procurements of LNG without tenders and even on single bid are mis-procurement under PPRA Rule 50.
B. PSO and Qatargas deal of 15 years is illegal and amounts to mis-procurement under PPRA Rule 50.
C. ENOC LNG offer of G-to-G deal between Ministry of Petroleum Pakistan and UAE Government of less than 13% of Brent, with 60 days deferred payment may be processed for 5 years only, which will be compliant to PPRA rules, as well as with recommendations of MoP Consultants for short-term agreement in view of huge shale export for Australia in 2018 at lower costs."
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