Two RLNG terminals: TI-P urges PQA to scrap ‘shady’ contracts

Business Recorder

ISLAMABAD: Transparency International-Pakistan (TI-P) has urged Port Qasim Authority (PQA) to scrap the recently awarded contracts of two RLNG terminals, as tender changes in the contract have raised ‘several questions’.

In a letter to Chairman, PQA, TI-P’s Vice Chairman Justice Ghous Muhammad (retired) has cited media reports, that in 2019, the federal government was facing stiff resistance from Ministries of Communications, Planning, Development and Reform and Public Procurement Regulatory Authority (PPRA) on a “fishy deal” for the establishment of the third LNG terminal This resistance was witnessed during the ECC meeting held on July 3, 2019 with Finance Adviser Dr Abdul Hafeez Sheikh in the chair.

On March 27, 2019, ECC gave the following directions: (i) Ministry of Maritime Affairs to broaden the scope of scientific study to be carried out for determination of suitable place for establishment of LNG terminal at PQA, and also at Sonmiyani site in the study; and (ii) Ministry of Maritime Affairs to expedite process for establishment of 3rd LNG terminal in view of imminent shortage of gas in the country and submit progress report to the ECC within 15 days.

Ministry of Maritime Affairs stated that in view of the urgency expressed by the ECC, to establish additional LNG terminal, PQA management assigned the task to review five QRA reports available in respect of five potential offshore LNG terminal sites to M/s HR Wallingford, and on May 15, 2019, M/s HR Wallingford submitted its site selection review report, confirming that all the five available QRAs are feasible from navigational standpoint, and quoted estimated capital dredging required for deepening, widening and straightening of main channel at 48 million cubic meters and 10 million cubic meters for opening of alternate channel.

The PQA Board then discussed that as the ECC has placed expeditious establishment of 3rd LNG terminal at the highest priority, ie, prior to both completion of feasibility study on deepening, widening and straightening of existing navigational channel and commissioning of alternate channel and also prior to completion of LNG Zone study an expeditious process for award thereof must be derived. The complete process was published in media on July 12, 2019 with caption Fishy’ third LNG terminal deal.

However, against award of only one LNG terminal, as planned and approved by PQA Board, recommended by PQA Consultants M/s HR Wallingford , and also included in the LoI issued to 5 bidders, two LNG terminals are awarded one to M/s Tabeer Energy and 2nd to M/s Energas, which has rendered the whole process non-transparent.

TI-P is of the view that post tender changes by PQA for award on two LNG Terminals, against one LNG terminal in 2020, as advertised and included in the LoI, issued to 5 JVs, and in violation of condition precedent that “the LNG terminal developer will not be in any legal/quasi legal dispute with PQA,” has rendered the whole process illegal. The second party awarded the contract is the Group of Lucky Commodities, which is in litigation with PQA in Sindh High Court Suit No 818 of 2019.

TI-P further says that in similar case of award of first LNG terminal in 2014 to ETPL (Elengy Terminal Pakistan Limited) to Engro Pakistan, post tender changes were made , mainly by PQA on the site of LNG terminal, not allowed at its sister company site.

It was reported that NAB has raised objections against PQA on award of first LNG terminal due to post tender changes, given the fact that initially the PQA also raised several observations on the proposed sites of ETPL and PGPL, but suddenly gave consent on the proposed sites of ETPL and allotted 13 acres of land.

In Rental Power Plant (RPP) case on January 31, 2015, while scrapping all rental power projects, the Supreme Court held that all the Government functionaries, including the Ministers for Water and Power holding charge in 2006 and onward and from 2008 and onward, during whose tenure the RPPs were approved/set up and Minister as well as Secretary Finance holding the charge when the down payment was increased from 7% to 14%, prima facie, violated the principle of transparency under Articles 9 and 24 of the Constitution and Section 7 of the Act, 1997, therefore, their involvement in getting financial benefits out of this by indulging in corruption and corrupt practices cannot be overruled. Consequently, they are liable to be dealt with under the National Accountability Ordinance, 1999.

TI-P has suggested that the award of two LNG terminals must be canceled as post tender changes for award of two LNG terminals against one LNG terminal as advertised, and also the awards of LNG terminal to M/s Energas, whose one Group is in litigation with PQA, is violative of Rules, and the order of the Supreme Court of Pakistan in HRC No.7734-G of 2009, of January 31, 2015 for such violations, prima facie are non-transparent.

According to TI-P, PQA is already facing a NAB reference in its first LNG terminal on similar post tender changes charges.

“If the allegations of post tender changes are correct, PQA is recommended to address the violations, in order to avoid another NAB reference on LNG terminal contract award,” TI-P Vice Chairman added.

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