ISGS, EETPL term LNG contract transparent

Islamabad
The NAB has picked up pace of probe into the LNG terminal contract award in chemical zone at Port Qasim and to this effect it has summoned today (Monday) the top management of Inter State Gas System (ISGS) and financial advisor of Ministry of Petroleum and Natural Resources (MoNR) to look into the' questionable role' of ISGS from carving out the RFP (request for proposal) of the project to the tendering process and then up to the awarding of the contract.
The NAB is also investigating into the procurement phase of the project for which it has already acquired the relevant documents from Pakistan State Oil (PSO), Engro Elengy Terminal Private Limited (EETPL), Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL).
The top man of Inter-state gas system along with directors of the company will give presentation to the NAB officials in Karachi and will face the questions about the role of ISGS in whole process of LNG terminal contract despite the fact ISGS has nothing to do with dealing such things it has mandate only to deal with trans-nation gas pipeline such IP and TAPI gas line projects. Why ISGS was included in the process? It is the question that will be put by NAB to the government of the day.
"Yes, we are going to Karachi where in ISGS will give detailed presentation to the NAB officials on its role in awarding LNG terminal contract to EETPL, Managing Director ISGS Mr Mobine Saulat told The News claiming that the contract was awarded through a transparent process and our hands are clear.
He said that NAB has earlier interacted with officials of ISGS on the same subject in the meeting in which it was decided that a detailed presentation on the issue will be given soon after Eidul Azha.
However, the NAB sources said that the contract as awarded on single bid basis and allowed to install the LNG terminal in Chemical zone not in the LNG zone showing the government has obliged the favurite one company in the whole process. The government has included the ISGS just to keep its influence in the whole contract awarding process as ISGS has all the government board members and there is no private member in it.
The whole process should have been initiated by Sui Southern from request for proposal (RFP) to awarding the contract but the government wanted to keep its all influence which is why it has included ISGS in the whole process. The Sui Southern since has the private and government members in its board of directors which is why the government was feared that contract may not go to the company it liked the most.
The Engro’s EETPL spokesman said: “EETPL is clear and the bidding process was transparent. The EETP is open to any kind of investigation. We assure the stakeholders the entire process of LNG terminal is transparent.”
According to NAB officials M/s Interstate Gas Company (ISGSL) processed the bids for evaluation and award of LNG terminal to M/ Engro LNG (ELENGY), even though bids were issued by SSGCL which is legally incorrect because it had no legal relationship with SSGC.
M/s Gas Port Ltd and M/s Engro LNG participated in this tender for LNG terminal wherein Gas Port was technically rejected and the contract was awarded to M/ S Engro LNG. This is despite the fact that in previous tender which was scrapped for political reasons, M/S Gas Port had qualified in the technical evaluation by a big margin. This was done to eliminate competition so that Engro LNG high processing rates could be accommodated at the expense of public at large. Resultantly LNG is being sold in Pakistan at a higher rate than that of Furnace Oil wherein NTDC / Wapda has refused in writing to do the allocation for various IPPs since it can run them on cheaper furnace oil which is resulting in supply of expensive power to people of Pakistan
SSGC board has only approved the initial draft of LSA agreement with Engro LNG subject to the condition that M/s PSO will undertake all obligations in case of failure to import LNG while idle charges will not be billed to SSGC. PSO however didn't provide the undertaking to SSGC while agreement was forcefully signed by the GOP from SSGC MD ZuhairSiddique at that time. Now SSGC is being billed millions of dollars for idle capacity of the terminal since PSO has failed to ensure continuous supplies while MD ISGSL has failed to resolve port issues with Port Qasim owing to which Qatar Qflex ships cannot enter our sea channel.
M/s Engro is charging costs on LNG re-gasification @ 66 cents / mmbtu legalised while the same in the initial years is exceeding U.S.$1.45 per MMBTU. Recently M/S Akbar associates had bid for 2nd LNG terminal @ 49.9 cents / mmbtu while M/s Gas Port had bid for 52 cents / mmbtu which shows the tremendous padding was done in case of tariff awarded to Engro LNG by MD ISGSL. Both Akbar Associates and M/S Gas Port were to set Green Field terminal from a scratch in LNG Zone declared by Port Qasim Authority (PQA) where the costs are very high compared withg Engro which has only modified its existing terminal in main navigation channel. PQA has been resisting setting up Engro LNG terminal in main navigation channel since it will block all other ship movements resulting in extreme traffic delays while putting the entire port at risk of explosions or fire. Engro LNG was however given the permission and were not forced to go to LNG zone despite PQA insistence owing to extensive pressure from MPNR. Even the LNG terminal which was to be set up by M/s Mashal was given a tariff of 50 cents per MMBTU which was to be reduced to 35 cents per mmbtu after payment of loans. M/S Mashall was however scrapped by the Supreme Court of Pakistan owing to high price and other irregularities. It is very interesting that the same Company "Excelerate" which had provided floating terminal to Engro has also given it in Bangladesh where tariff given is only 47 cents per mmbtu straight.
Ms. Engro has only invested $135million in the Engro LNG terminal. Engro will however mop up US$1.8 Billion dollars during the 15-year period while the entire cost will be recovered in 1.5 years.