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Honourable Chief Justice of Pakistan Takes Notice On News Stories Regarding Lng Contract

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Islamabad, March 10, 2013 (PPI-OT): The Honourable Chief Justice of Pakistan Mr. Justice Iftikhar Muhammad Chaudhry took notice on a press clipping as well as the note of Registrar containing the details regarding the LNG contract and issued notices to Secretaries of the Ministry of the Petroleum, Finance and Economic Affairs, MD, PEPRA, Chairman SSGC, both incumbent and former Mr. Waqar A. Malik who has reportedly tendered resignation. The Secretary, Petroleum has been further directed to effect service upon the bidding parties through his own sources through use of e-mail, fax, telephone, etc.

The note of the Registrar is as under:-

In the Suo Moto Case No. 5 of 2010 (Action regarding huge loss to public exchequer by ignoring lowest bid of Fauji Foundation and Multinational Energy from Vitol by awarding LNG Contract) reported as PLD 2010 SC 731, the Court inter alia observed as under:

“10. A careful perusal of the above facts reveals that Ministry of Petroleum and SSGCL had not followed the process for awarding contract for LNG supply by Marshal or Short Term Project seriously and with high order of transparency as it is evident from the facts and circumstances narrated above. We also find from the documents made available that there is price slope averaging from 0.145 to 0.155, which need to be kept in view.

Here we may observe that it is duty of the Court to ensure that the Public Procurement Regulatory Authority Ordinance, 2002 read with the Public Procurement Rules, 2004 are adhered to strictly to exhibit transparency. It is universally recognized principle that such type of transactions must be made in transparent manner for the satisfaction of the people, who are the virtual owners of the national exchequer, which is being invested in these projects.

16. In view of illegalities, irregularities, omissions and commissions, noted in instant case, we are constrained to make observations, that the officers/functionaries responsible for the same are required to be dealt with in accordance with law and that the Chief Executive/Prime Minister of Pakistan shall probe into the matter accordingly. ”

2. Notwithstanding the categorical observations of the Supreme Court in the above mentioned case, laying stress on fair dealing and transparency in award of LNF contract, PUC are press clippings published in daily “Dawn”, “the Express Tribune, Lahore/Islamabad dated 9.3.2013, which state that the ECC failed to take a decision on award of a multi-billion dollar contract for import of 400 million cubic feet of Liquefied Natural Gas (LNG) and left the matter to the Federal Cabinet to take difficult decision.

That an immediate meeting of the Federal Cabinet was likely to be convened early next week to resolve the controversy after some members of the ECC questioned the summary submitted by the Petroleum Ministry to declare Pakistan Gasport consortium as lowest bidder by pronouncing another bidder as non-compliant. Reportedly, some of the participants said the bidding results had not been approved by the board of directors of the SSGC and the summary seeking approval of Gasport Consortium as lowest successful bidder was prepared in haste. Further, Mr. Waqar A. Malik, Chairman of the SSGC Board had tendered his resignation on 7.3.2013 after the board was asked to declare Gasport Consortium as successful bidder.

He said that even though Engro Terminal had quoted two separate benchmarks for LNG import price, its final bid price calculated by the SSGC’s bid committee was on the lower side when compared with Gasport. Further, a sub-committee appointed by the ECC to investigate a previous non-professional handling of the LNG import bidding had not completed its job and instead got itself involved in the fresh bidding that was not its mandate. In the meeting of Economic Coordination Committee (ECC) questions were also raised as to when the previous bidding was cancelled after the Gasport’s bid was challenged for being 20 minute late after the cut-off time, there was no reason not to cancel the second round when similar deviations had been noted again.

They were also critical of the fact that the government in its last week in office should commit sovereign guarantees for 15 years and hence the propriety demanded the matter be left to the next government to decide. Owing to serious arguments over the issue, the ECC decided to leave the matter to the Federal Cabinet for a final decision.

3. Meanwhile, daily “the News” of today dated 10.3.2013 has reported that the Federal Cabinet is likely to approve next week the LNG (Liquefied Natural Gas) tender for the import of 400 MMCFT LNG on the basis of the recommendations of the Board of Directors of the Sui Southern Gas Pipelines Company, (SSGC) and the Economic Coordination Committee of the Cabinet.

The news story goes on to state that three bidders have been technically declared qualified by the SSGC and their Consultants. They are, M/S ELENGY of ENGRO Pakistan, GIP of Turk Consortium and Pakistan Gasport of Iqbal Z Ahmed. Financial bids have been evaluated and the SSGC Board is expected to recommend the lowest bidder in their meeting scheduled for tomorrow (Monday). On the basis of which the Federal Cabinet is likely to take final decision before its dissolution on 16.3.2013.

4. From the above, it is obvious that an effort is being made to approve the contract for the import of LNG in haste, without fulfilling the requirement of fairness and transparency and compliance with the Public Procurement Rules.

Apparently, the Chairman of the SSGC Board Mr. Waqar A. Malik has expressed reservations over the deal by tendering resignation. This is huge contract involving payment of multi-billions dollar as well as sovereign guarantees. The expenditure is to be incurred from the public exchequer. HCJ may therefore consider taking suo moto action in the matter under Article 184(3) of the Constitution as it entails violation of Article 9, 18, 23, 24 and 25 of the Constitution.

After going through the contents of the note the Honourable Chief Justice of Pakistan, Mr. Justice Iftikhar Muhammad Chaudhry passed the following order.

“I have perused the above stated press clippings as well as note of the Registrar containing inter alia relevant extract from the Judgment of the Court (PLD 2010 SC 731). It is to be seen as to whether the contract of LNG is being awarded in a transparent manner or otherwise, in view of the allegations reported in the newspapers.

The issue may therefore be registered as Constitution Petition under Article 184(3) of the Constitution and fixed in the Court on 11.3.2013. Notices be issued to the Secretaries of the Ministry of the Petroleum, Finance and Economic Affairs, MD, PEPRA, Chairman SSGC, both incumbent and former Mr. Waqar A. Malik who has reportedly tendered resignation. The Secretary, Petroleum is further directed to effect service upon the bidding parties through his own sources through use of e-mail, fax, telephone, etc.”

For more information, contact:
Shahid Hussain Kamboyo
Public Relations Officer
Supreme Court of Pakistan
Tel: +9251 920 4184
Fax: +9251 920 1001
Email: pro_scp@yahoo.com

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