Wednesday, April 14, 2010
SC resumes hearing today

By Rauf Klasra

ISLAMABAD: The Supreme Court today (Wednesday) resumes its suo moto hearing of the case involving the multibillion-dollar LNG deal given to French company - GDF-Suez.

While GDF’s fortunes have already been hit hard by the devastating testimony of the former finance minister Shaukat Tarin who even asked the SC to scrap the deal altogether, the going got tougher as one official secret document submitted before the court by MD Fauji Foundation General Rab Nawaz reveals that Asian Development Bank too had supported the lowest bid of VITOL/FF, which incidentally was never presented before the Economic Coordination Committee after rejecting all desperate pleas of President Vitol to PM Gilani and Petroleum minister Naveed Qamar to simply let ECC to consider the offer as it was in Pakistan’s best interest.

But, surprisingly, both PM Gilani and Minister Naveed Qamar apparently preferred to ignore the desperate pleas of president Vitol, whose only request was to place his company bid before ECC as he had claimed it to be better than that of GDF-Suez, which was given the deal after petroleum ministry had simply hidden the presence of the Vitol offer.

The documents presented before the SC on Monday by MD FF and obtained by The News revealed that even the Prime Minister of Pakistan Yusuf Raza Gilani was approached by president Vitol. PM Gilani was asked to play his role to at least open the bidding price offer by Vitol/FF before ECC but the desperate pleas of Mr Ian Taylor to the country’s chief executive bore no fruit either.

The documents presented before the court also reveal that petroleum minister Naveed Qamar too had declared the bid of VITOL/FF as “attractive” in his letter addressed to President Vitol Ian Taylor on March 2 in response to a letter by Mr Taylor who had complained on his bid not being presented before the ECC despite an earlier long process of hectic and long negotiations.
source: http://www.thenews.com.pk/top_story_detail.asp?Id=28312

CJ gives credit to Klasra for exposing mega scam

ISLAMABAD: Chief Justice Iftikhar Mohammad Chaudhry paid rich tributes to Editor Reporting, The News, here on Wednesday during LNG scam proceedings, saying he deserved “credit” for doing such hard work to highlight the mega scam.

In an unprecedented move, the CJ also directed all the government and non-government parties, which appeared before the Supreme Court on Wednesday, that they all should provide each and every file and document to Rauf Klasra, so that he could study them and know the latest position of the case.

The CJ also recorded in his order before adjourning the hearing till April 21 that Klasra should be given copies of the official record. Earlier, the journalist appeared for the third time before the Supreme Court hearing the LNG scam. Top lawyers Abdul Hafeez Pirzada nad SM Zafar were also present to represent their clients in the court.

The tributes to Editor Reporting have come at a stage when chairman NA Standing Committee on Petroleum Sheikh Waqas Akram with active collaboration of 18 members of the committee not only distorted the facts presented before them last week by Rauf Klasra and Shaukat Tarin, but also threatened to take legal action against the journalist, when the reporter challenged him to face him in any TV show to prove him wrong. It is very interesting to note that the facts and documents presented before the NA body on petroleum by Klasra and Tarin were rejected with contempt by MNA Sheikh Waqas Akram but the same were accepted by the SC and verified by the petroleum ministry officials.

source:http://www.jang.com.pk/jang/apr2010-...10_29123_1.gif

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Reality is something you rise above.

SC Orders ECC to Revisit LNG Contract, Transparently, Report By Rauf Klasra
29 April, 2010

ISLAMABAD: The Supreme Court on Wednesday reversed the faulty decision of the Economic Coordination Committee (ECC) of February 9 to award the multibillion dollar LNG contract to GDF-Suez and ordered a fresh process of award of contract based on transparency.

The SC also hoped that Prime Minister Yousuf Raza Gilani would take strict action against the negligent officers of the Petroleum Ministry. The three-member bench, headed by Chief Justice Iftikhar Mohammad Chaudhary, announced the judgment after hearing the case for 10 days. Justice Ch Ijaz Ahmed and Justice Ghulam Rabbani were its members.

The Supreme Court in its judgment observed that “in view of illegalities, irregularities, omissions and commissions, noted in instant case, we are constrained to make observation that the officers/functionaries responsible for the same are required to be dealt with in accordance with law and we hope that Chief Executive/Prime Minister of Pakistan shall probe into the matter accordingly. Kamran Lashari, secretary petroleum, has stated that as now he is secretary, he would deal with the matter himself and GA Sabri, special secretary petroleum, shall not be associated with it.”

The judgment observed that the “Ministry of Petroleum and the SSGCL had not followed the

process for awarding contract for the LNG supply for Mashal or Short-Term Project seriously and with high order of transparency as 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 needs 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 strictly to exhibit transparency. It is universally recognised 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.”

The judgment said during the course of hearing, it was observed by the court that since Letter of Support (LoS) dated December 17, 2008 was issued by the SSGCL in favour of 4-Gas on the recommendations of the ECC as no other developer was declared to be qualified by the Consultants of SSGCL, introducing Shell Gas & Power and GDF Suez at this stage seems to be not covered by the documents in pursuance whereof 4-Gas was declared qualified for integrated project; therefore, to achieve the transparency, openness, fairness and justness in awarding contract, the ministry of petroleum ultimately has to commence the proceedings of awarding of the contract from the stage where it was left, when instead of approving the name of 4-Gas for Mashal Project and the name of Fauji/Vitol for short term LNG supply were not mentioned in the summary submitted to ECC and the names of Shell Gas & Power and GDF-Suez were recommended.

The court judgment also said earlier decision of the ECC, agreeing to award the contract of LNG supply to any firm/company/party would not give right to any of such firm/company/party to make claim in this behalf and the same shall be of no consequence.

The judgment said, upon this, the learned counsel requested for time to seek instructions from the concerned authority. As such on 27 April, 2010, following order was passed: “Learned counsel appearing for the parties have stated that this case may be adjourned enabling the learned counsel appearing for the federation of Pakistan to seek instructions from the Prime Minister of Pakistan on the following lines: a) In view of the importance of the matter, put up before Court in pursuance of news clipping dated March 29, 2010, appearing in The News and on hearing the observations of the Court during the course of hearing, would it be possible to direct the ministry of petroleum to put up a fresh summary through a responsible officer before Economic Coordination Committee (ECC) for considering the case of 4-Gas for Mashal Pakistan Project and on the basis of the same, fresh decision shall be taken for awarding the contract for supply of LNG to 4-Gas, declared qualified by the Consultant of SSGCL. b) As simultaneously Short-Term LNG Supply Project is also under consideration in which Fauji/Vitol are the lowest bidders; their cases shall also be considered by the ECC, besides the case of Mashal to take decision thereon independently.

The court said it is to be noted that on the even date Kamran Lashari, incumbent secretary petroleum contended that in view of the observations of the Court, made during the course of hearing, the government was ready to place fresh summary to the ECC by commencing the proceedings, wherefrom the same were left.

The judgment said: “Ministry of petroleum has come forward with the following statement and has requested to dispose of the matter in terms thereof: That without prejudice to its stand taken in Court the government confirms that it shall 1. Put up a summary relating to the Mashal Pakistan Project before the Economic Coordination Committee (ECC) for a fresh decision for awarding the contract for supply of LNG to 4-Gas, the developer declared qualified by the consultant SSGCL; 2- Simultaneously put up a summary relating to the Fauji/Vitol proposal against advertisement for expression of interest dated 18 July 2009 for consideration and decision independently and separately from the case of Mashal; 3- As a consequence of 1 above, the ECC decision dated 9 February 2010 to award the contract of supply to any person would not give any right to such person to make any claim in this behalf and shall be of no consequence. Learned counsel also stated that the above stand of the Federation is with the concurrence of Prime Minister of Pakistan. Copy of the above statement was handed over to Mr. Abdul Hafeez Pirzada, Sr. ASC, Mr. Anwar Mansoor Khan, Sr. ASC, Mr. Ali Zafar, ASC Barrister Sajid Zahid, ASC and Mr. Rauf Klasra on which they have expressed their satisfaction on the above statement and desired for decision of the petition in terms thereof”.

The judgment said, in view of statement made by the Federal Government, reproduced above, this petition is disposed of accordingly, with the hope that now the matter shall be considered in a highly transparent manner, both for Mashal Pakistan and Short-Term LNG Supply Projects.

Earlier, when the court resumed its proceedings, Hafeez Pirzada raised serious objections over headline given by The News on Wednesday. The headline said “SC pulls the plug on dirty multi-billion dollar LNG deal”. Pirzada only raised objection over and again on the headline saying why the word “dirty” was written in the headline and that it was not good journalism. He said these journalists were young and would learn with the passage of time.

Pirzada said his client GDF-Suez was also happy over the judgment of the case. Pirzada said even the CEO GDF-Suez had come all the way from London to attend these proceedings and he too accepted the decision of the court.

Subsequently, The Editor Reporting explained before the court that Pirzada did not have any objection over the contents of the main story, but only its headline. He submitted before the court that usually legal and journalistic languages are quite different and unless the whole background of the case was explained to readers, the technical things might get more confused for them to understand. He said full point of view of Pirzada giving comprehensive side of his client was fully reproduced in the same story, so Pirzada had only objection to the word “dirty” used in the headline.

source:http://thenews.jang.com.pk/arc_defau...date=4/29/2010

__________________
Reality is something you rise above.

sourece:http://ejang.jang.com.pk/4-30-2010/images/1048.gif

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Reality is something you rise above.

Saturday, May 01, 2010

IFTIKHAR MUHAMMAD CHAUDHRY, CJ. - This Human Right case was initiated on news item appearing in daily newspaper ‘the News’ dated 28th March, 2010, of which note was put up by the Registrar of this Court and the same was treated as petition under Article 184(3) of the Constitution for the facts disclosed therein in respect of alleged massive Suo Moto Case No.5 of 2010 2 corruption in awarding contract of supply of LNG.

Upon the office note, following order was passed:- ‘A perusal of the above note indicates that a huge loss has been caused to the public exchequer as a result whereof public at large has been deprived from this amount, which could be utilized for their welfare and, prima facie, such actions seem to be violation of fundamental rights, principle of transparency and equal opportunity.

Therefore, this office note be treated as petition under Article 184(3) of the Constitution and be fixed before the Court tomorrow i.e.

2nd April, 2010. Notice be also issued to Mr. Rauf Klasra, reporter of ‘the Newsí to appear and place on record the documents on the basis of which he has flashed this news item.î

2. In pursuance of above order Mr. Rauf Kalasra appeared and placed on record a copy of letter dated 10th February, 2010, issued by Mr.

Shaukat Tarin, former Finance Minister to Mr. G.A. Sabri, Special Secretary, Ministry of Petroleum and Natural Resources; contents whereof read as under:- ‘Please refer to the captioned agenda item discussed at the ECC meeting of February 09, 2010. Today, I was contacted by the Managing Director of Fauji Foundation who enquired from me as to why their joint bid with VITOL was not entertained despite being the lowest. Given, that the VITOL/FAUJI proposal was not even presented, I could not give him a satisfactory answer.

2. Therefore, I would like you to advise me urgently as to why their offer was not considered by your Ministry and the evaluation committee.

Thanks and regards.

Sd/-(SHAUKAT TARIN)’ Suo Moto Case No.5 of 2010 3

Mr. Rauf Kalasra stated that when he learnt about awarding of contract for supply of LNG, he probed into the matter and discovered that before awarding the contract to one of the foreign firm, the Ministry of Petroleum had, in principle, decided to give contract to Shell Gas & Power Co. and towards that end, the Minister for Petroleum was invited to Doha to witness signing of relevant documents in due course.

He referred to a letter addressed to Mr. Naveed Qamar, Minister for Petroleum and Natural Resources, dated 4th February, 2010 by H.E. Abdulla Bin Hamad Al- Attiyah, Deputy Premier, Minister of Energy & Industry, State of Qatar. He explained that the Ministry of Petroleum, in order to provide the contract for supply of LNG to Shell Gas & Power, prepared a summary dated 8th February, 2010 and referred the matter to ECC, recommending the name of Shell Gas & Power and GDF Suez, leaving behind the FAUJI/VITOL, a Pakistan-based company, which was interested in Short Term LNG Supply project.

The ECC, due to intervention of the Ministry of Petroleum, declined to approve the name of Shell Gas & Power for supply of LNG and recommended the name of GDF Suez. Mr. Kalasra stated that the proceedings for completion of the contract were not carried on in a transparent manner.

4. Mr. S.M. Zafar, Sr. ASC appeared on behalf of Federation of Pakistan, Mr. Abdul Hafeez Pirzada, Sr. ASC for GDF Suez, Mr. Ali Zafar, ASC for Sui Southern Gas Co. Ltd. (SSGCL), Barrister Sajid Zahid, ASC for Fauji Foundation and Mr. Anwar Mansoor Khan, Sr. ASC appeared on behalf of Mr. G.A. Sabri, Special Secretary, Ministry of Petroleum.

5. Initially, in order to comprehend the nature of this complex issue Mr. Naim Sharafat, Senior Project Director, SSGCL was heard in Suo Moto Case No.5 of 2010 4 detail, who explained his view point as follows:- ‘In February, 2005 Planning Commission presented an Energy Security Plan to the then President and the Prime Minister, wherein the gap between demand and supply of gas in the long term was projected containing gap coverage strategy.

It was mentioned in the plan that there should be LNG Projects and pipelines for supply of gas from outside the country.

It was proposed that Sui Southern Gas Co. Ltd. (SSGCL) should be made facilitator as the LNG was to reach at Karachi and the terminal was to be built there and then it will be the responsibility of the SSGCL to supply.

The role of facilitator, as per LNG policy, was to move with the project and obtain the approval of Government of Pakistan, wherever it is identified and required. First of all, when the SSGCL was appointed as facilitator, it appointed a consultant on the project after due process; seven international and local consortiums applied for the same; one of them namely consortium of ABN Amro (local company) and Poten and Partner (from Australia) were selected; this consortium was of international repute. Board of Directors of SSGCL approved the process and granted permission for award of contract to them.

The contract was awarded in October, 2005. After their appointment, they prepared a concept report in order to determine as to in what form this project would be suitable for Pakistan. (copy of the same shall be submitted).

Since the international market demands the policy of the Government of Pakistan, therefore, Pakistanís first LNG Policy was formulated which was approved by the Economic Coordinatio n Committee (ECC) in April, 2006; thereafter, SSGCL initiated the Expression of Interest (EoI) process in terms of LNG Policy and an advertisement in this behalf, which was as per the LNG Policy, was made in International Dailies i.e. Khaleej Times and Financial Times London as well as in national dailies.

In response to that advertisement, 53 companies applied for registration out of which after evaluation, 36 companies were supplied with a document called Expression of Interest, prepared by the consultant. Out of those 36 companies, only 14 companies provided their statement of qualification document /Prequalification, as per the EoI document. Out of these 14 companies, six companies applied for integrated projects (including construction and operation of the terminal as well as supply of Suo Moto Case No.5 of 2010 5 LNG and we will only purchase gas from them); second process was that one company will construct the terminal and the other will supply/bring the LNG); third process was only for supply; so the six companies were for integrated project, six for construction of terminal and two for only supply.

Since the integrated projects suits us because we had no experience in LNG process being a different market world, therefore, we opted for integrated project and we placed the same before ECC, who approved the same in February, 2007.

After that approval, we floated the tendered document i.e. Request for Proposal document to five companies as the sixth one (i.e. Fauji Foundation) who had applied for both the projects merged into one.

Out of those five companies, three withdrew their proposal as at that time internationally the LNG market was very tight and supply was not available. So only two companies namely Shell Gas & Power and Consortium of Fore Gas, Fauji Foundation, Fotco and Soges submitted their bids.

This bid was subject to two bid package system i.e. Technical and Commercial (after evaluation the price was to be considered). On receipt of bid, the Consortium reduced to three companies as the fourth one Soges withdrew from the same.

Our consultant evaluated them and we made a presentation before the Ministry of Petroleum. Upon clearance from the Ministry of Petroleum, the proposal call was made to both the companies i.e. Shell and the Consortium of Foregas, Fauji and Fotco.

In September, 2007, both of them submitted their price proposals, containing both the proposals i.e. land based terminals and floating terminals.

Since the land based terminals require long time of about 5/6 years for construction and we had specifically mentioned in the tender that we need early supply possibility, as energy supply gap was being faced since 2005, therefore, the floating terminal option, offered by the Consortium of 4-Gas, Fauji Foundation and Fotco was accepted.

However, in April, 2008 the Fauji Foundation and Fotco withdrew from the Consortium. So far, award is under process. We asked the 4-Gas whether it will continue on the project as on stand on basis, to which they replied that they take the responsibility and will continue on the project.

After the price proposal, etc. as the market was very tight and no supply was available, some LNG projects also started in the private sector.

For this reason, it was said by the LNG supplier (i.e. Qatar Petroleum, the largest supplier of LNG in the international market and the Foregas has to take Suo Moto Case No.5 of 2010 6 supply from it) that it will only deal with the Company having Letter of Exclusivity. Since there was no provision in the tender document for issuance of Letter of Exclusivity, therefore, Ministry of Petroleum after approval of ECC, issued Letter of Support not Letter of Exclusivity on 17th December, 2008, which was valid only for nine months, during which the Foregas had to identify the suppliers and those suppliers had to submit original documents showing their capacity to supply and the period of supply.

On 26th August, 2009 these documents were supplied to us.

After that Price Negotiation Committee (PNC) was constituted, who also negotiated the matter with Shell, GDF Suez, BP, Total, Woodside and Mitsubishi for supply. Ultimately, best offer was made by GDF Suez for the first six years.

In July, 2009 fresh Expression of Interest was invited for short term supply of LNG on the direction of Minister for Petroleum. At that time Dr. Aasim was Incharge of the Ministry.

Letter in this behalf was issued by the Director General Gas to issue Expression of Interest ad for supply of gas for short term i.e. five years.

Upon receipt of bids, the same were sent to the Ministry of Petroleum with our reservations over it that it will complicate the situation and both the processes are to be dealt with separately and a clear line is to be drawn between both the processes.

However, we received instructions to proceed as such we continued the process. In end of July, 2009, we received ten bids from different companies/consortium including Shell, Fauji Foundation/Vitol, Engro Exel, etc. in response to advertisement made in all local leading newspapers including Dawn, News, Jang, etc.

Since it was not the Mashal Project and was short term LNG Project, therefore, we did not involve our Consultant. After general evaluation of these ten bids, we proposed to the Ministry of Petroleum that Shell Gas & Power is a company, which can supply LNG; secondly we proposed though Fauji/Vitol has offered the package for supply along with terminal, having capacity of 1 million ton of LNG but it is not involved in the LNG business, as evident from their web-site.

Since Price Evaluation Committee was constituted in the meantime and it also considered Shell as it was included in the suppliers of Mashal project as well as in short term LNG project and Fauji/Vitol.

These negotiations were only for supplies as it had already been decided that terminal would be of Foregas because it was installing both land based as well as floating terminals; although our main concern was land based Suo Moto Case No.5 of 2010 7 terminal but its cost was too high, which would result in high tariff of the gas so we preferred the floating terminal option; we asked to establish floating terminal for 5/6 years and then to convert it into land based terminal.

Negotiations were made on price formula and volume of supply; the final result of the negotiations was sent to the Consultants for their opinion; on 22nd January, 2010 they opined that the offer of GDF Suez with regard to medium term supply is very attractive and if there is no other proposal like it, we should go by it (copy of that opinion shall be supplied).

They also opined that in case of supply for 20 years, there will be greater risk; the supplier will not take such risk and put it in the price formula as well as we also cannot take risk, but for the supply of 5/6 years there is calculated risk therefore, the cost will be less.

The final summary is made by the Ministry of Petroleum, however, we just submit the evaluation report as well as other documents along with our recommendations made in line with the recommendations of the Consultant.

We are not involved in the preparation of summary. Since, in the instant case the summary was prepared on the basis of price negotiation and the Price Negotiation Committee, Chaired by Special Secretary, who had all the necessary documents with him, was involved in it and we just forwarded the opinion of our Consultant. So further process was completed by them without our involvement except the fact that I also remained as member of the Price Negotiation Committee after October, 2009.

The main recommendation was of GDF Suez for six years as per the quoted price rate, whereafter GDF Suez was offering 1 million ton which could go up to 1.5 million ton per year. Fauji/Vitol had not made any separate offer for supply of LNG alone as their offer made in July, 2009 was for supply with terminal. The advertisement made in July, 2009 was for supply only whereas the Fauji/Vitol made offer for supply with terminal.

It was not recommended as it was not in Mashal Project whereas this summary was for Mashal Project. Though they had made new offer for short term project but they had withdrawn from Mashal Project. Mashal Project is separate and short term LNG Project is separate. We have not considered the Fauji/Vitol in Mashal Project.î

6. Likewise, Mr. G.A. Sabri, Special Secretary Petroleum appeared with the permission of the Court and narrated the steps taken so Suo Moto Case No.5 of 2010 8 far in the LNG supply project. He also submitted his written reply along with all supportive documents, which are made part of the record of the case.

7. Mr. S.M. Zafar, Sr. ASC appearing on behalf of the Federation of Pakistan disowned the stand taken by the above two officers and argued the case on behalf of the Federation on its independent footing.

Similarly Mr. Ali Zafar, ASC made his submissions on behalf of SSGCL.

Mr. Abdul Hafeez Pirzada, Sr. ASC stated that the company being represented by him enjoys international recognition in the business of LNG and it could not involve itself in any sham-deal, if at all it had taken place, because being one of the interested companies to supply LNG in Pakistan it came forward and quoted its rates.

As far as the procedure of finalizing the same is concerned, it has nothing to do with the same and it was for the Government of Pakistan to decide it.

8. We have heard the learned counsel for the Federation of Pakistan, SSGCL and for FAUJI/VITOL as well as Special Secretary, Ministry of Petroleum. From the facts narrated hereinabove, it is to be observed that as:—

a) In 2006 the LNG Policy was approved for the sustainable development of the energy sector including the provision of reliable and competitively-priced energy.

b) In pursuance of above policy SSGCL was appointed as facilitator whereas RBS and Poten & Partners were appointed as consultant by the SSGCL to take forward the project.

c) On 10th May, 2006, by making publications, applications were invited for Registration for Expression of Interest Process from the companies interested, for the purpose of following integrated project:- Suo Moto Case No.5 of 2010 9 #

a) Supply of regasified LNG to SSGCL, including LNG procurement, transportation, setting up LNG terminal and operating the same;

b) LNG tolling terminal by construction, owning, operating and maintaining an LNG import terminal;

c) Supply of LNG to SSGCL on a long-term, takeor- pay basis using customary international terms and conditions.

d) In response to above, initially 53 companies got themselves registered and after short listing 14 companies were approved for issuance of Letter of Expression of Interest; out of them six got the said letter including the 4-Gas.

e) 4-Gas was a consortium comprising of 4-Gas, FAUJI FOUNDATION, FOTCO, VITOL.

f) It appears that except the Consortium of 4-Gas, no other company was declared qualified by the Consultant, ultimately.

g) 4-Gas Consortium applied for Letter of Exclusivity in December, 2008 and the matter was placed before the ECC, who agreed upon issuance of such letter but Ministry of Petroleum issued Letter of Support to 4-Gas in December, 2008, contents whereof read as under:- ‘Sui Southern Gas Company Ltd (‘SSGCLî) with the consent of the Ministry of Petroleum of the Government of Pakistan (‘GOP’), is pleased to issue this Pre-Award letter to the 4-Gas consortium (the ‘Consortium) for the Pakistan Mashal LNG Project (‘PMLPî) a project with a base load capacity of 3.5 mtpa to be located at the proposed Consortium site (‘Siteî) at Port Qasim near Karachi, Pakistan.

The PMLP will supply, on a longterm (20-25 year) basis, approximately 500 MMSCFD of Regasified Liquefied Natural Gas (‘RLNGî) to SSGCL at the agreed quality which is almost 50% of the country’s gas shortfall in 2010/11.

The PMLP is to be developed on an integrated basis and as such the Consortium shall be responsible for LNG supply, marine transportation, unloading, storage and regasification at the terminal to be built and operated by the Consortium in Pakistan.

Suo Moto Case No.5 of 2010 10 SSGCL, with the approval of GOP initiated a Request for Proposal (‘RFP’) process in February 2007 and has no wreached a stage where project award decision can be made in favour of bidder meeting all or most of the RFP requirements and submitting suppliers documentation as confirmation of LNG volumes for PMLP.

The Consortium has emerged from the PMLP RFP process, facilitated by SSGCL, as the bidder meeting most of the RFP requirements and is given exclusivity in progressing the Project further to a stage where project can be awarded and executed in accordance with the agreed contract structure, subject to providing evidence of LNG supply of PMLP.

The PMLP is of national importance and the completion of this strategic infrastructure for Pakistan is considered by GOP to be of the top most priority. The LNG supply for Pakistan to be secured at international competitive LNG price.

SSGCL further confirms that GOP will enter into an Implementation Agreement with the Consortium after project award.

The Implementation Agreement will contain standard concessions and permissions and provide protection against political risks, as per GOP Policies and other Pakistan infrastructure projects.

The Implementation Agreement will also provide guarantees for SSGCL’s RLNG cost (including LNG, freight, terminal and regasification charges) payment obligations under the proposed Gas (RLNG) Sale and Purchase Agreement.

This letter is issued to confirm our intentions and to assist the Consortium to progress discussions with LNG suppliers and contractors for all aspects of the PMLP. The Consortium has permission to communicate the contents of this letter to LNG suppliers and EPC contractors.

As a fundamental requirement, the PMLP will be developed to satisfy both Pakistan and international standards and codes of practice. On the basis this requirement is met, GOP will facilitate in obtaining approvals sought by the Consortium for the Site on a timely basis.

On receipt of this letter, 4-Gas Consortium is required to coordinate with Port Authorities and finalize a date for presenting the site specific Qualitative Risk Assessment Study (QRA), Preliminary Risk Analysis (PRA) and results of Suo Moto Case No.5 of 2010 11 Navigational Simulation Study in order to start the PQA NOC process.

Upon submission by the Consortium of satisfactory documentary evidence that a minimum LNG volume for PMLP has been secured and a NOC from the PQA for the terminal has been obtained, a formal and final PMLP award decision will be made after GOP approval.

Upon issue of this letter, the Consortium, at its own cost and risk, will promptly demonstrate commitment to a FEED study and continue to submit available documentation to SSGCL/GOP as confirmation of progress towards securing LNG volumes for PMLP.

The Consortium will be ready to award an EPC contract for the project within the validity of this letter and financial close as expediently as possible thereafter. It is expected that a Heads of Agreement for the minimum LNG supply will also be ready to be signed within the validity of this letter.

The Consortium shall provide SSGCL/GOP with regular (fortnightly) progress reviews on all aspects of the PMLP.

This letter is valid for 9 months from the date of issue, however, lack of progress on the Project may result in withdrawal of this letter at SSGCL’s sole discretion.

Keeping in view the LNG supply and demand situation, this letter is seen as a critical step in proceeding further with the PMLP and towards securing long-term LNG volumes for Pakistan, being a new entrant in the LNG world.î h) 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 Interestî to the General Manager (Materials Management) on the address given below by 31 July, 2009.’ Suo Moto Case No.5 of 2010 12 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.

9. It is alleged on behalf of the FAUJI/VITOL that they submitted their conditions of Short Term LNG Supply and Price Negotiating Committee (PNC) had been negotiating with them by convening number of meetings but surprisingly instead of recommending their name, the Ministry of Petroleum put up a summary on 9th February, 2010 to ECC for approving the Shell Gas & Power or GDF Suez to award contract of Mashal Project, therefore, on acquiring knowledge of this fact, they agitated the matter before the Minister for Petroleum.

10. A careful perusal of the above facts reveals that the Ministry of Petroleum and SSGCL had not followed the process for awarding contract for LNG Supply for Mashal 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. [Messrs Airport Support Services v. The Airport Manager, Quaid-e-Azam International Airport, Karachi (1998 SCMR 2268) and M/s Ramna Pipe and General Mills (Pvt) Ltd. v. M/s Sui Northern Gas Pipe Lines (Pvt) Ltd. (2004 SCMR 1274)].

Suo Moto Case No.5 of 2010 13

11. During the course of hearing, it was observed by the Court that since Letter of Support (LOS) dated 17th December, 2008 was issued by the SSGCL in favour of 4-Gas on the recommendations of ECC as no other developer was declared to be qualified by the Consultants of SSGCL, introducing Shell Gas & Power and GDF Suez at this stage seems to be not covered by the documents in pursuance whereof 4-Gas was declared qualified for Integrated Project; therefore, to achieve the transparency, openness, fairness and justness in awarding contract, the Ministry of Petroleum ultimately has to commence the proceedings of awarding of the contract from the stage where it was left, when instead of approving the name of 4-Gas for Mashal Project and the name of FAUJI/VITOL for short term LNG supply were not mentioned in the summary submitted to ECC and the names of Shell Gas & Power and GDF Suez were recommended.

Upon this, the learned counsel requested for time to seek instructions from the concerned authority.

As such on 27th April, 2010, following order was passed:- ‘Learned counsel appearing for the parties have stated that this case may be adjourned enabling the learned counsel appearing for the Federation of Pakistan to seek instructions from the Prime Minister of Pakistan on the following lines:- a) In view of the importance of the matter, put up before the Court in pursuance of news clipping dated 29th March, 2010, appearing in ‘the Newsî and on hearing the observations of the Court during the course of hearing, would it be possible to direct the Ministry of Petroleum to put up a fresh summary through a responsible officer before Economic Coordination Committee (ECC) for considering the case of 4-Gas for Mashal Pakistan Project and on the basis of the same, fresh decision shall be taken Suo Moto Case No.5 of 2010 14 for awarding the contract for supply of LNG to 4-Gas, declared qualified by the Consultant of SSGCL.

b) As simultaneously Short Term LNG Supply Project is also under consideration in which Fauji/Vitol are the lowest bidders; their cases shall also be considered by the ECC, beside the case of Mashal to take decision thereon independently.

c) Earlier decision of the ECC, agreeing to award the contract of LNG supply to any firm/company/party would not give right to any of such firm/company/party to make claim in this behalf and the same shall be of no consequence.

Request is allowed. Adjourned for tomorrow i.e. 28th April, 2010.î

12. It is to be noted that on the even date Mr. Kamran Lashari, incumbent Secretary Petroleum contended that in view of the observations of the Court, made during the course of hearing, Government was ready to place fresh summary to the ECC by commencing the proceedings, wherefrom the same were left.

13. Today, the Ministry of Petroleum, Government of Pakistan, through Mr. S.M. Zafar, Sr. ASC has come forward with the following statement and has requested to dispose of the matter in terms thereof:- ‘STATEMENT ON BEHALF OF GOVERNMENT OF PAKSITAN, MINISTRY OF PETROLEUM, ISLAMABAD.

That without prejudice to its stand taken in Court the Government confirms that it shall

1. Put up a summary relating to the Mashal Pakistan Project before the Economic Coordination Committee (ECC) for a fresh decision for awarding the contract for supply of LNG to 4-Gas, the Developer declared qualified by the Consultant SSGCL.

2. Simultaneously put up a summary relating to the Fauji/Vitol proposal against advertisement for Expression of Interest dated 18 July 2009 for consideration and decision independently and separately from the case of Mashal.

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3. As a consequence of 1 above, the ECC decision dated 9th February 2010 to award the contract of supply to any person would not give any right to such person to make any claim in this behalf and shall be of no consequence.

Sd/- Kamran Lashari Secretary Petroleum.

Dated 28.04.2010.î Learned counsel also stated that the above stand of the Federation is with the concurrence of Worthy Prime Minister of Pakistan. Copy of the above statement was handed over to Mr. Abdul Hafeez Pirzada, Sr. ASC, Mr. Anwar Mansoor Khan, Sr. ASC, Mr. Ali Zafar, ASC Barrister Sajid Zahid, ASC and Mr. Rauf Kalasara on which they have expressed their satisfaction on the above statement and desired for decision of the petition in terms thereof.

14. Thus in view of statement made by the Federal Government, reproduced above, this petition is disposed of accordingly, with the hope that now the matter shall be considered in a highly transparent manner, both for Mashal Pakistan and Short Term LNG Supply Projects. No order as to costs.

15. Mr. Abdul Hafeez Pirzada, Sr. ASC states that GDF Suez is not involved in any manner in deal causing loss to the nation of Pakistan yet on appearing of the news item and initiation of instant proceedings thereon, has caused damage to its goodwill, therefore, appropriate order protecting its position be passed in this behalf.

Mr. Rauf Kalasra, Senior Correspondent, daily newspaper ‘The News í, however, reaffirms the stand taken by him in the news item. Be that as it may, as determination on merits has not been made by this Court to declare the involvement of GDF Suez, no order/observation is required to be passed in this behalf.

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16. In view of illegalities, irregularities, omissions and commissions, noted in instant case, we are constrained to make observation that the officers/functionaries responsible for the same are required to be dealt with in accordance with law and we hope that Chief Executive/Prime Minister of Pakistan shall probe into the matter accordingly. Mr. Kamran Lashari, Secretary Petroleum has stated that as now he is Secretary, he would deal with the matter himself and Mr. G.A. Sabri, Special Secretary Petroleum shall not be associated with it.

Before parting with the judgment, we would like to place on record our thanks to Mr. Rauf Kalasra, Mr. S.M. Zafar, Sr. ASC, Mr. Abdul Hafeez Pirzada, Sr. ASC, Mr. Anwar Mansoor Khan, Sr. ASC, Mr. Ali Zafar, ASC and Barrister Sajid Zahid, ASC for providing valuable assistance in disposal of this matter.

source:http://www.thenews.com.pk/print1.asp?id=236859

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Reality is something you rise above.

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Reality is something you rise above.

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Reality is something you rise above.