ISLAMABAD: The Public Procurement Regulatory Authority (PPRA) has allowed Pakistan LNG Limited (PLL) to procure 12 spot cargoes of Liquefied Natural Gas (LNG) for six months, from January to June 2024, with directions for early approval of spot procurement rules, official sources told Business Recorder.

Managing Director PPRA informed the Board that Ministry of Energy (Petroleum Division) through a letter on July 11, 2023 requested the Authority to allow exemption to Pakistan LNG Limited from Rule 13 (1) 35 of Public Procurement Rules, 2004 to procure LNG cargoes from spot market from January 2024 to December 2024 (approx. 24 Spot cargoes).

He further explained that the Board had earlier recommended partial exemption to PLL from applicability of Rule 13 and 35 of Public Procurement Rules, 2004 for the procurement of LNG spot cargoes till December, 2023. With permission of Chair, MD (PLL) who was a special invitee, it was further explained that PLL has exemption till December and it is due to the allowed exemptions PLL has been able to procure LNG cargoes from spot market.

Pakistan seeks two LNG cargoes for winter

He apprised the Board that LNG market is volatile and procurement of spot cargoes is not possible under the prevailing requirement of Rule-13 of Public Procurement Rules, 2004 which requires minimum thirty days for international competitive bidding; whereas, price volatility and evolving LNG market dynamics require procurement decisions to be taken on spot.

He further proposed that PLL may be allowed exemption of Rule 13(1) and 35 of Public Procurement Rules, 2004 for procurement of approx. twenty-four LNG cargoes from January 2024 to December 2024 for procurement of spot cargoes.

One of the Board Members pointed out that the Board has been recommending exemptions to PLL since 2021. Hence, it would be more feasible if Public Procurement Rules are amended to facilitate such kind of procurement. MD (PPRA) explained that after a lot of effort and rigorous in-house exercise and taking stakeholders on board, PPRA management had proposed a specific rule in this regard which was approved by the PPRA Board after thorough deliberations to enable such kind of procurement.

After approval of PPRA Board, the drafted rule was forwarded to Law and Justice Division which proposed certain amendments.

The improved rule after incorporating the proposed amendments of Law Division was forwarded to Cabinet Division. The new rule is now required to be placed before the Cabinet Committee for Disposal of Legislative Cases (CCLC). The representative of Ministry of Energy, special invitee, apprised that State Owned Entity (SOE) procurement policy of PLL is in the making in Cabinet Division which also caters for such kind of procurement.

Secretary Finance/ Chairman PPRA Board inquired if any of the Board Members had any reservations. The Board Members resolved that considering the price volatility, changing market dynamics and justifications provided, exemption request of PLL appears to be a viable option. Secretary Finance inquired whether the Board should recommend exemption from January to December, 2024 or otherwise.

One of the Board Members opined that previously the Board had recommended exemption to PLL for a period of six months for procurement of spot cargoes. Likewise, the Board may recommend exemption to PLL for six months from January 1, 2024 to June 30, 2024 for procurement of approximately twelve spot LNG cargoes.

He further added that there is a probability that the proposed rule for such kind of procurement might be approved by the federal government which will not require PLL to seek any further exemption.

After deliberations, the Board decided to recommend to the Federal Government under Section 21 of PPRA Ordinance, 2002 to grant exemption to PLL for a period of six months from January 1, 2024 to June 30, 2024 from applicability of Rules 13(1) and 35 of Public Procurement Rules-2004, for the procurement of approximately twelve LNG spot cargoes 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 redressal of grievance of the aggrieved bidders, if any.

Moreover, the Procuring Agency shall ensure publication for the invitation to bid in widely circulated Urdu and English newspapers.

The Board also directed PPRA management to liaise with Cabinet Division and CCLC on fast-track basis for approval of the specific proposed rule for enabling spot procurement.

Copyright Business Recorder, 2023