‘Fishy Deal’: Five, Not Single Firm to Compete for Third LNG Terminal at Port Qasim

Offshore LNG terminal owned and operated by Pakistan GasPort Consortium Limited (PGPC)

The federal government also expressed serious concern over delays and held Port Qasim Authority (PQA) responsible for the holdup.

DESPARDES — The award of contract to a lone bidder (favored company) for a third offshore liquefied natural gas (LNG) terminal on build, operate and transfer (BOT) basis at Port Qasim has been sent back to the drawing board for review of its procurement cycle.

The government planned to construct the third LNG terminal in the main channel at Port Qasim on fast-track basis to meet the rising demand of natural gas, which would increase in winter. The port, its ancillaries, and the terminals are federal holdings.

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Existing two terminals are owned and operated by Engro and Pakistan GasPort Consortium– the Ministry of Maritime Affairs had earlier declared the construction of these terminals wrong, causing heavy losses to the national exchequer. The two terminals were contracted on take-or-leave basis costing the government more than $0.5m per day, a Dawn report said.

For the third terminal, a lone firm was being actively considered– the authorities want the energy platform operationalized by November 2020.

The move to award a multimillion-dollar LNG terminal contract to a ‘favored foreign company‘ was however set aside by the cabinet, and five interested firms will now participate in a competitive public bidding process under the Procurement Laws.

The Ministries of Communications, Planning, Development and Reform and the Public Procurement Regulatory Authority (PPRA) were not comfortable with the single firm based negotiated bid process being considered, alleging “fishy deal,” according to Business Recorder.

The ‘favored company’ was being reportedly being considered by invoking the extreme urgency clause (Rule 42(d)) of the public procurement laws, The clause allows award of contract on single-bid albeit negotiated price basis only on emergency.

In such a scenario, the stated clause would allow a negotiated contract with even one firm. However, interpreting a situation an ’emergency’ is a hard ball to play with, given the likelihood of perception of potential conflict of interest and related pitfalls.

The Public Procurement Regulatory Authority (PPRA) reportedly opposed negotiated contract with single bidder, saying energy crisis was not an unsolvable event for which extreme urgency could be invoked– a view that some experts say holds true.

The Economic Coordination Committee (ECC) had proposed the grant of exemption from PPRA rules and permitting one company to participate in bidding for the LNG terminal. However, the cabinet opposed the exemption and argued that the process should be transparent and fair bissing environment should be obvious. They were of the view that all five companies interested in setting up the third LNG terminal should be allowed to participate through public bid process.

PPRA officials drew attention to a decision of the Supreme Court, in which the top court declared “thus, in presence of PPRA rules, it was incumbent upon the minister and the secretary water and power as well as other functionaries not to have put up such a case before the ECC in violation of the PPRA rules.”