Ministry of Petroleum and Natural Resources has assured the Transparency International Pakistan (TIP) that Pakistan Mashal LNG project would be handled in line with the Public Procurement Regulatory Authority (PPRA) Rules, judgement of Supreme Court, and Ministry of Law interpretations.
The assurance has been given in response to a letter written by TIP Chairman Syed Adil Gilani on May 17, pointing to reports regarding exemption of the ministry from PPRA rules for early materialisation of the LNG project to import 3.5 million tons of LNG per annum. "We are well aware of the importance of transparency in the tendering process," the ministry assured.
In an earlier letter sent to the Ministry of Petroleum and Natural Resources on April 21, Adil had drawn attention of the ministry to reports suggesting that the ministry "will seek special waiver in PPRA rules from the Prime Minister to rapidly materialising the LNG project to import 3.5 million tons of LNG per annum."
The much-touted project to import 3.5 million tons of LNG was earlier put on backburner after findings of the Law Ministry in light of the Supreme Court verdict. However, the ministry intends to re-tender the whole project in line with the findings of the Law Ministry and Supreme Court verdict but with new shorter process time.
TIP had informed the ministry that the Supreme Court had ordered in the suo motu case No 5 of 2010 for the GDF Suez supply of LNG, dated April 28, 2010 as under: "Thus, in view of the statement made by the Federal Government, reproduced above, this petition is disposed of accordingly, with the hope that now the matter shall be considered in a highly transparent manner, both for Mashal Pakistan and Short Term LNG supply project."
In the same case, the Supreme Court order contains the following remarks regarding PPRA and the statement of senior project director of Sui Southern Gas Company Limited (SSGC):
"Here we may observe that it is duty of the court to ensure that the Public Procurement Regulatory Ordinance 2002 read with the Public Procurement Rules, 2004 is adhered strictly to exhibit transparency. It is a universally recognised principle that type of transactions must be made in transparent manner for the satisfaction of people, who are the virtual owners of the national exchequer, which is being invested in these projects."
TIP had further informed the Ministry that under PPRA rules, the normal time period for award of tenders from public tender notice to award of contract is 45 days for national bidding, and 60 days for international bidding, and many contracts were awarded within this time period. An example of Pakistan Steel of 2005 where the international contract was awarded in 60 days, including 30 days for press advertisement, and the material was supplied within three months and 11 days from the date of tender.
In view of the above, TIP had requested the ministry to order strict compliance of PPRA rules 2004, so that projects could be awarded within 45-60 days' time, and that, too, to the technically best bidder and at the most economical cost. The Ministry of Petroleum and Natural Resources has directed SSGC to ensure compliance of Supreme Court's judgement, interpretation of Ministry of Law and PPRA rules, while executing LNG projects.
All loans by government and by every lender/donor/financial institution are always subjected to open competitive bidding for all procurements. All loans are paid by public, the taxpayers of Pakistan, and have to be spent in most economical manner. PPRA was created under World Bank recommendations for: enactment of a modern, transparent and competitive public procurement law based on 'Uncitral' model law for procurement, and; creation of a small, independent procurement regulatory agency, with functions defined by the procurement law (which are mainly confined to policy, documentation and development of rules, etc and not to include line clearance functions for awarding of contracts).