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July 21, 2019

Shahid Abbasi nabbed in LNG terminal case

Top Story

July 21, 2019

ISLAMABAD: The NAB has not arrested Shahid Khaqan Abbasi in the LNG procurement contract signed by PSO with QatarGas under govt-to-govt arrangements but nabbed him for the LNG Regasification Terminal Contract signed by SSGC with ENGRO Elengy after a competitive PPRA compliant bid and tender process.

The News has got copy of the NAB’s ground of arrest as well as Shahid Khaqan Abbasi’s response to these charges conveyed exclusively to this correspondent through a source who met the former prime minister on Friday when he was brought before the accountability court for remand. For the interest of the readers, the NAB’s ground of arrest and Shahid Abbasi’s response are presented in the following.

The NAB document says, “Whereas You, Shahid Khaqan Abbasi S/o M Khaqan Abbasi have committed offence of corruption and corrupt practices falling u/s 9(a) (vi) & (xii) of National Accountability Ordinance 1999 and serial No 5 of schedule thereto in investigation relating to award of LNG Terminal-1 to M/S EETPL at Port Qasim, Karachi at exorbitant rates through LNG Sale Agreement (LSA) dated 30.04.2014 etc. Sufficient material/evidence are available to connect you with commission of offence aforesaid.” The bureau notice added that following grounds from basis for Abbasi’s arrest:

NAB’s ground (a): Investigation revealed that you, being ex-minister of petroleum & natural resources (MP&NR) in July, 2013, misused your authority in the selection of M/S QED Consultant as "International Consultant" for completion of bidding process for establishment of LNG terminal-1 in violation of "Procurement of Consultancy Services Regulations, 2010" which provides various methods for selection of consultants, selection committee and professional liability of consultants etc.

AKA response to ground (a): i) QED Consultants were hired by USAID under its Aid Programme for Pakistan’s energy sector after their own procurement process. ii) The USAID fully paid for this consultancy from their own funds. iii) The Ministry of Petroleum had no say in the selection of this consultant. iv) No payment was made by the Ministry or SSGC. v) PPRA or any other Pakistan government rules were not applicable in this matter.

NAB’s ground (b): Investigation revealed that you, being ex- minister of Ministry of Petroleum & Natural Resources (MP&NR) in 2013, misused your authority in entrusting LNG related activities to ISGS (Inter State Gas Systems Pvt Ltd) for establishment of LNG Terminal-1 instead of SSGCL (Sui Southern Gas Company Ltd) which was actual LNG procuring agency as per policy of MP&NR in the year, 2006.

SKA response to ground (b): ISGS is a fully owned (100 percent ownership) by the government of Pakistan and has experience in negotiating large contracts as it did for TAPI and Iran-Pakistan Gas Pipeline. SSGC had earlier failed in five (5) attempts since 2004 to set up an LNG terminal. The SSGC does not have the required expertise or capability to complete this procurement contracts. The Ministry, SSGC Board and ISGS Board all approved the inclusion of ISGS in this procurement process. The LNG Services Agreement (LSA) was signed by SSGC with Engro after SSGC Board approval. ECC and Cabinet approval was also done. It should be noted that SSGC is a company registered under SECP with independent directors on its board.

NAB’s ground of arrest (c): Investigation revealed that you misused your authority in getting your hand-picked legal firm i.e. Maverick Advisory hired for attachment with M/S QED Consultant for preparation bidding documents (RFP & LSA etc) for establishment of LNG Terminal-1 without open competition.

SKA’s response to ground (c): Same as response (b) above because of the fact that procurement/selection of this consultant was also done by the USAID. Ministry or any government institution was not involved.

NAB’s ground of arrest (d): Investigation further revealed that you mala fidely used your influence as minister in the consultation process etc of ISGS and SSGCL in connivance with other accused during negotiation of LSA (LNG Services Agreement) dated 30.04.2014 between M/S EETPL and M/S SSGCL in favour of M/S EETPL.

SKA’s response to ground (d): The LSA document was part of the tender/bid documents. All bidders used the same document. The same LSA is the contract between SSGC and Engro for the Terminal at Port Qasim, which has not been operational for over 5 years. No change was made in the LSA. This was a completely transparent PPRA compliant tender or bid process. The price for this terminal in MMBTU was $0.46/MMBTU, which at that time was the lowest in the world.

NAB’s ground of arrest (e): The record of the defunct MP&NR (Ministry of Petroleum and Natural Resources), ISGS and M/S SSGCL revealed that amount of $272,479 was fixed as exorbitant capacity charges for first year while $228,016 were fixed as exorbitant capacity charges for year 2 till 15th year as per bid of M/S EETPL, being a sole bidder without any justifiable reasons for accepting the said charges or its breakdown.

SKA’s response to ground (e): These charges were not fixed. These are the numbers that the bidders provided in their respective bids. The bid/tender details are as follows: Two bidders participated in the two-stage bid process. One bidder did not qualify in the technical evaluation stage of the bid process. That particular bidder did not protest or use the grievance mechanism. The financial bids were opened in the second stage. Only one financial bid was opened as the other bidder had been disqualified in the technical evaluation stage. This is as per PPRA rules. To simply put it- this is a procurement in IPP mode with price determined by a bid process rather than an up-front tariff.

NAB’s ground of arrest (f): Investigation also revealed that your authority in connivance with co-accused in stopping retrofit effort of SSGC LPG terminal for LNG use, permission of establishment of LNG Terminal in Chemical Zone of Port Qasim Authority (PQA) and appointment of Shahid Muzzafar-ul-Islam as acting MD between February, 2015 to July, 2015 for commencement of LNG Terminal-1 under Master SPA and finally appointment of Sheikh Imran-ul-Haq (ex-CEO of M/S EETPL) as MD PSO from August, 2015 to onward.

SKA’s response to ground (f): SSGC LPG retrofit was a flawed process that all industry experts rejected. LPG terminals have nothing in common with LNG terminals. Doing this LPG retrofit had no cost advantage and would have deprived Pakistan of its only dedicated LPG terminal. This LPG terminal in question was already under international litigation like Reko Diq for hundreds of millions of dollars. We won that litigation in 2017. Port Qasim did not approve this LPG retrofit.

Shahid Khaqan Abbasi, however, opted not to respond to the last four grounds of his arrest for obvious reasons. These grounds as per NAB document are: g) You willfully and mala fidely failed to exercise your authority to prevent a colossal loss of Rs1.544 billion for idle days plus other loss due to exorbitant capacity charges etc which constitute offences as defined u/s 9 (a) (vi) & (xii) of NAO 1999 and S No 5 of schedule thereto. h) Evidence collected so far, directly connect you with the commission of offence. i) That there is strong likelihood of your abscondance. j) That there is likelihood of destruction/disappearance of relevant evidence/ record at your part.

It was also claimed by Shahid Khaqan Abbasi that NAB conducted an inquiry into the Engro-SSGC terminal contract in 2015-2016 and had closed the case after its probe. He said he had voluntarily participated in the inquiry while he was minister for petroleum.

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