the LNG case

This is a news report of the proceedings:

” How many companies had showed their interest in participating in bid till the last date of advertisement given by you in the press and how many companies were short listed”, justice Chaudhry Ejaz inquired.

G.A.Sabri told 53 companies participated in it and among them 36 companies were short listed.
As per documents provided by you 5 companies were short listed, the court remarked. Special project manager Sui Southern Gas , Naeem Shaukat told the court 5 out of 53 companies were short listed till last date. These companies were AES, ENI, 4 GAS, Mitsui and Shell gas, he added.

The court asked from G.A Sabri the company wise details with reference to their offer and the reason why they were included in final list. He could not give any reply on this count.

“You are special secretary and not a section officer that you have no knowledge about it”, the court inquired.

” You had finalized the names of these five companies for bidding” CJP inquired. These companies had given good offer therefore, these were short listed, he told.

Justice Ghulam Rabbani remarked ” from where the sixth company GD F Suez did come. Have you further advertised it after the Swiss company joined the bid. G.A.Sabri replied no he did not do so.

“According to your first statement Shell was also not included in the bid then from where it came now”, CJP asked.

He told 4 gas was selected for final approval and its approval was accorded by ECC.

“Tell us about the date when ECC had approved it”, CJP remarked. 4 gas was asked to supply liquid gas and 9 months time frame was given to it to discuss the matter with its suppliers and present its report to us so that contract may be awarded to it, he told.

The court asked which were the suppliers of 4 gas. They were wood side Australian company, British petroleum, GDF Suez and Mitsui French company , he told.

“You have opened Pindora box here. You have selected GDF Suez for awarding contract and now it has become evident from your statement that the company in question is not bidder but it is supplier only”, CJP remarked.

“Awarding the contract to a company which is not included in bidding is strange”, justice Ejaz remarked. The CJP while adjourning the hearing till today directed G.A. Sabri not to waste his and the court�s time. All the facts be brought into the knowledge of the court instead of confusing it so that it could reach any decision, he remarked. .

As you can see, the Supreme Court has (either out of ignorance, or deliberately), created the impression that GDF Suez was given a contract for the integrated Mashal project – which is not correct. If you read the judgment, GDF Suez was given the contract to supply the LNG for the project, which is exactly what it was first contacted (via 4-gas) to do.

The legitimate question to me, is why was a second round of bidding (for the short term LNG supply) opened up (which was when Fauji rejoined the bidding after it had dropped out of its consortium with 4-gas for the long-term Mashal project), when GDF Suez had already been picked by the government and 4-gas as the supplier in the integrated project. Unfortunately the judgment does not answer that.

Here’s the description of the July 2009 bid:

In the meantime, vide another advertisement dated 18th July,
2009, SSGCL invited Expression of Interest for Short Term
LNG Supply, contents whereof read as under:-

“The Government of Pakistan (GOP) through the
Ministry of Petroleum & Natural Resources, has been
progressing the long term, base load, integrated “Pakistan
Mashal LNG Project” with facilitation by Sui Southern Gas
Company Ltd.
In view of the acute shortage of natural gas in the country and
consequent shortfall in electricity generation, GOP now wishes
to separately secure readily available Liquefied Natural Gas
(LNG) on short term basis (up to 5 years). Parties having access
to LNG volumes for immediate delivery are requested to provide
an either FOB or CIF basis, an “Expression of Interest” to the
General Manager (Materials Management) on the address given
below by 31 July, 2009.”

j) It seems that in response to above advertisement, 10
companies got registration including FAUJI/VITOL in this
project and ultimately except FAUJI/VITOL, remaining
companies were short listed.

Now the questions I have are, 1) considering that GDF Suez had already been under consideration for the short term supply before the decision to invite bidders was taken, was the GDF Suez offer placed into the pool of new bidders? 2) Why was the new letter sent out anyway? 3) Why did Fauji drop out of the original consortium with 4-gas for the Mashal project? 4) Why did it reappear, offering a terminal in response to the second advertisement when that was clearly not required since 4-gas was already building the terminal??

The judgment doesn’t answer this very simple set of questions.


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