ISLAMABAD, Jan 22: The $25 billion worth of project for import of 400mmcfd (millions cubic feet per day) of Liquefied National Gas (LNG) to bridge gas shortfall faces another fiasco that may lead to termination of the bidding process.

A similar project Mashaal was terminated about two years ago after the Supreme Court of Pakistan found deviations from procurement rules.

Prime Minister’s adviser on petroleum and natural resources Dr Asim Hussain told Dawn on Tuesday after presiding over a meeting of the bid committee that he was moving a summary to the Economic Coordination Committee (ECC) of the cabinet to reject bids and start the bidding process afresh because two of the three bids were non-responsive and procurement rules did not allow contract on single bid basis.

He said one of the bidders Pakistan Gas Port Limited had submitted the bid after the cut-off time that was objected to by another bidder Global Energy International. Under section 28 of the Public Procurement Rules 2004, “bids submitted after the time prescribed shall be rejected and returned without being opened”, Dr Asim said.

Likewise, the Pakistan Gas Port raised objections over bid bond submitted by Global Energy saying it was not in line exchange rules of the State Bank of Pakistan. The adviser said under section 30 of the PPRA rules, the rate of exchange shall be the selling rate, prevailing on the date of opening of bids specified in the bidding documents, as notified by the SBP on that day”.

The third bidder Engro Terminal Pakistan Limited objected over both the bids coming from Pakistan Gas Port and Global Energy. Mainly because of this controversy, the bid committee did not open the financial bids. The adviser said section 33 of the PPRA rules allowed rejection of all bids to ensure fair competition.

He said both the non-responsive bids involved minor deviations but “even if we indemnify these violations” through the ECC, these could be challenged in the court.

He said the ministry would seek guidelines from the ECC as to how to move ahead with the project but it would recommend fresh bidding to make the process transparent and avoid litigation.

In a statement issued after the meeting of the bid committee, the adviser said the LNG import needed to be urgently completed to minimise the gap between gas supply and demand but the process should be completely transparent and as per PPRA Rules.

Global Energy International a Turkish bidder to the project called it a foul to declare its bid as non-responsive only to facilitate Pakistan Gas Port even though its bid bond for $1 million was issued by the National Bank of Pakistan that even issued certificates to confirm that the bond was of the required amount. It also made a formal complaint to the Transparency International.

Global Energy said the relevant chapter III of the foreign exchange manual of the SBP required that except with the general or special permission of the SBP, all transactions in foreign exchange shall be carried out at rates authorised by the SBP.

This involved a general permission to authorised dealers to determine their own rates of exchange, both for ready and forward transactions for the public, subject to the condition that the margin between the buying and selling rates should not exceed fifty paisa per US dollar or its equivalent in other currencies. This condition does not apply to inter-bank transactions.

It said the authorised dealers, including National Bank of Pakistan, were allowed to determine their own rates of exchange for ready and forward transactions and it is by virtue of this legal power that National Bank has determined the exchange rate for US dollars one million.

It said the executing agency Sui Southern Gas Company did not have powers under the Foreign Exchange Regulation Act of 1947 to determine conversion rate on its own and hence it had not mentioned the requirement in the bid documents that the rate of a particular scheduled bank would be the applicable benchmark.

The Transparency International supported the Global Energy’s stance saying the PPRA rules did not allow receipt of the Gas Port’s bid after the cut-off time that should have been “returned unopened”.

It alleged that the Gas Port’s bid was received despite objections by other two parties which appeared “to have been done because of a call from some higher office” and hence it fell under the definition of corruption practices under the NAB Ordinance.

It said the Gas Port had also defaulted to set up LNG terminal at Port Qasim despite having signed an implementation agreement in April 2007. The TI demanded NAB proceedings against officers for violating procurement rules and misusing their authority in accepting a bid after the cut off time.

The Transparency International said efforts were going on to derail $25 billion procurement, which had already been delayed for 4-5 years only due to wrong policies of the petroleum ministry while the country faced acute gas shortages. A petroleum ministry official who did not want to be identified said the Transparency International was favouring the Turkish Firm.