The much-delayed Iran-Pakistan gas pipeline project faces yet another holdup because of a domestic contractual issue. According to a press report, former Petroleum Minister Syed Naveed Qamar had decided to award contract for Front End Engineering Design study (FEED) - which is to serve as a basis for a feasibility report for the benefit of potential investors - to a local affiliate of a foreign firm.
His portfolio having been changed in a recent Cabinet reshuffle, the concerned authorities are unwilling to take responsibility for the contract, saying it was awarded in contravention of public procurement rules for competitive bidding. They argue that the two national companies with substantial experience in the field, SSGCL and SNGPL, had offered to carry out a joint study at half the cost and within the stipulated timeframe, while the said firm wanted to complete in 18 months, agreeing only to reduce the time to 12 months, when reminded of an in-built penalty clause in the IP agreement. Apparently, these objections are valid.
It goes without saying that all public sector contracts ought to be awarded in compliance with the laid down rules and regulations, and in a transparent manner. Bids must be properly advertised and the interested parties given ample time to participate. If these basic requirements were ignored in the present case, that is bad enough. Worse still, the ensuing controversy and delay will invite penalties. And worst, the project will suffer a further slowdown. As per the IP agreement, FEED was to be ready by December of the current year, and gas flows were to begin in December 2014.
For its part, Iran is said to have constructed nearly 80 percent of the 900-km pipeline which, in the first phase, is to deliver at the Pak-Iran border one BCFD of gas, to be used mostly for generating 4,000 MW electricity. Unfortunately, our side is still squabbling over engineering design study contracts. At this rate, experts reckon, the project is likely to take seven years, instead of another three years to become operational.
This is going on despite a severe energy crisis in the country. It is almost the end of winter when the gas demand drops sharply, but at present shortages remain a constant problem for both domestic and industrial consumers. Scores of industries in the worst affected parts of Punjab have gone out of business because of gas unavailability. The approaching summer will aggravate the power crisis.
The petroleum ministry officials might have legitimate grudges on account of the previous FEED contract, but they must not allow these or the usual bureaucratic red tape to create any hindrance in the way of the IP. Relevant authorities need to be consulted to find a way forward. Our political leadership as well as bureaucracy must learn to look farther from the immediate and plan for sustained longer-term progress and prosperity.