Govt refuses to approve spot LNG purchase
The Oil and Gas Regulatory Authority (Ogra) is now in a critical situation pertaining to the consumer price determination following refusal of the federal government to accord ex-post facto approval to LNG imports from Qatar and its prices.
The National Accountability Bureau (NAB) has started investigation into LNG imports from Qatar on spot-purchase basis. Pakistan and Qatar have not yet signed any LNG supply deal in a government-to-government arrangement, which will bring gas without inviting tenders, but Pakistan State Oil (PSO) has bought the vital fuel from Qatargas in the spot market.
In the first phase, NAB started a probe into the LNG terminal deal and in the next phase its focus has shifted to the purchase of six LNG cargoes by PSO and its sale to consumers. Ogra had also refused to determine the LNG price because of questions raised over its spot purchase.
Read: Intense lobbying delays LNG import from Qatar
The Public Procurement Regulatory Authority (PPRA) rules say due process involving multiple potential suppliers must be followed. In other words, any procurement based on a single direct source is a violation of the PPRA law.
During discussions in an Economic Coordination Committee (ECC) meeting on September 3, there was no mention of giving the master sale agreement to other potential suppliers for competition. An ECC member told The Express Tribune that the committee was informed that six LNG cargoes were imported from Qatargas on spot-purchase basis under the master sale-purchase agreement signed between PSO and Qatargas.
The ECC was requested to grant ex-post facto approval of the federal government to the master sale-purchase agreement and the price of six cargoes sourced by PSO under confirmation notices.
An impression was also given in the meeting that the ex-post facto approval was required for the six LNG cargoes bought from Qatargas on free-on-board basis in a government-to-government arrangement.
This is surprising because Pakistan and Qatar have not signed any state-to-state deal for LNG supply. However, the ECC was told that LNG was imported in the wake of confirmation notices executed under the free-on-board sale-purchase agreement signed between PSO and Qatargas.
It was further informed that the master sale-purchase agreement was an umbrella document that sets out general terms and conditions without creating any binding sale and purchase obligations on the parties.
Read: NAB starts probing LNG imports from Qatar
According to the ECC member, the committee was of the view that PSO was competent to sign the agreement with Qatargas. This was similar to its earlier decision that said PSO being a commercial entity had the autonomy to import LNG either on free-on-board or cost-and-freight basis and take appropriate decision for import keeping commercial prudence and relevant rules and regulations in view.
Earlier, a PSO spokesperson had stressed that LNG had been imported after floating tenders through advertisements in newspapers and in response to that many suppliers had submitted bids.