Controversy over LNG import deepens
ISLAMABAD: The controversy over alleged violation of procurement rules in the bidding of $25 billion Liquefied Natural Gas (LNG) import project continues to deepen.
The only international firm – Global Energy International Pakistan (GEIP) – competing for LNG import project with two Pakistani bidders came out in the open on Monday to allege unfair treatment by authorities in the Sui Southern Gas Company (SSGC) and the Ministry of Petroleum in the bidding process.
Through a statement, the GEIP said the violation of procurement rules and requirements of the bid documents was detrimental to national interest of Pakistan and its image in the eyes of global investors, who were closely monitoring the tender process that was initiated under a decision of the government to bridge acute gas shortage.
It said the two bids were submitted by GEIP and Engro Pakistan in response to a request for proposal floated by the SSGC by the given time and date ie 4pm on Jan 9, 2013.
It said a late bidder ie M/s Pakistan GasPort Ltd (PGPL), attempted to deposit their bid after the stipulated deadline at 4.19pm, as recorded on ‘bid opening sheet’ issued by the SSGC.
The GEIP alleged that despite objections by the two compliant bidders, the SSGC officials acted in a partisan manner and received the bid of Pakistan GasPort Ltd (PGPL).
“It was pointed out at the bid opening time that receipt of late bid would constitute a violation of SSGC’s own RFP as well and a violation of PPRA Rule 28.2, which provides that required bids received after the time prescribed shall be rejected and returned without being opened.” The objection was recorded in writing.
It said the PGPL approached the SSGC and asserted that the amount of GEIP bid bond was less than $1 million required under the RFP even though PGPL could not be defined as a bidder under rule 2(b) of the procurement rules.
“We were expecting rejection of PGPL assertion by SSGC, as they have no locus standi under PPRA rules 28.2 and 2.b.
However, these two issues have become the centre of debate and discussion within the SSGC management and the Ministry of Petroleum and Natural Resources.”
It said the suggestions that the rupee value of GEIP bid bond was not equivalent to $1 million and that the late submission by one bidder was a minor discrepancy, was wrong.
It said the SSGC’s RFP required each bidder to “furnish as a part of its bid, a bid security of an amount not less than $1 million or equivalent Pak Rupees”. The SSGC did not specify the applicable rate for conversion between the two currencies. Therefore, any bidder could get the bid bond prepared by a scheduled bank on any date between the date of issue of RFP and the date of submission of bid at a rate in accordance with foreign exchange rules and procedures prescribed by the State Bank of Pakistan.
In line with SSGC RFP and foreign exchange act of 1947, the GEIP instructed the National Bank of Pakistan to issue a bid bond in the format and value as provided by the SSGC in the RFP. The National Bank of Pakistan, accordingly, issued the bid bond in the prescribed format. The bank has already certified after the objection raised by a non-bidder that the bond was issued in accordance with the prescribed procedures and its value is in compliance with SSGC’s RFP.
The GEIP said the SSGC could not validly and lawfully stipulate any new conditions ie the foreign exchange rate applicable, at the post-bidding stage with respect to its right to determine the rate of exchange of US dollars over and above a scheduled bank.
“All efforts to this effect are tantamount to a violation of PPRA Rules”, it said.
Such misinformation “has the potential to damage the reputation of our company and create a biased perception amongst the ordinary public during an ongoing international tender process” even though the GEIP remained seriously committed and have proactively participated in every apparent initiative by the government to import LNG into Pakistan in the last two years.
It said the GEIP had invested over $17 million for the project and completed all required permits and licences, leased land from Port Qasim Authority, prepared environment and social impact assessment on World Bank standards, completed field and navigational surveys and studies for LNG terminals, acquired modern and brand new technology for floating terminal and arranged $200 million financing from OPIC of USA and $700 million trade finance from European banks“All of our investment and the goodwill that we built for Pakistan with the LNG production and supply companies across the world have been put at stake to accommodate a bid, which is legally non-compliant under PPRA Rules,” the GEIP said, adding the continuation of already started bidding process in a fair and transparent manner was the single most important step towards securing Pakistan’s energy future.
PGPL denies GEIP statement
ISLAMABAD, Jan 28: The Pakistan GasPort Limited (PGPL) has denied the statement issued by the GEIP, terming it “deeply unfortunate.”
“The statement is an attempt to scuttle the transparent tendering process.”
The PGPL alleged that GEI’s bid bond was deficient in terms of the tender requirements because it fell short of the stipulated $1 million or Pakistani rupee equivalent.
“As such, in accordance with Public Procurement Regulatory Authority rules, the GEI bid is in fact non-compliant.”
The ETPL consortium led by Engro group has said since their bid stands compliant, they should be awarded the contract.