Despite the procurement regulator’s ruling allowing contracts on a single bid basis, the Economic Coordination Committee of the cabinet scrapped tenders on Tuesday for import of 400 million cubic feet of liquefied natural gas and ordered a ministerial probe into mismanagement of the bidding process.

The ECC meeting, presided over by Finance Minister Dr Abdul Hafeez Shaikh, also demoted the CNG sector to the bottom of the priority list for the supply of gas and upgraded the power sector, industrial and fertiliser consumers and cement one notch up. That means the CNG sector would get gas supply after fulfilling requirements of domestic, commercial, power plants, industrial, captive power, fertiliser and cement in that order. Earlier, the CNG was third on the priority list.

Briefing newsmen after the ECC meeting, the Prime Minister’s Adviser on Petroleum and Natural Resources, Dr Asim Hussain, said the gas companies had also been empowered to adjust gas supply requirements to different consumer sectors and get these adjustments reviewed by the ECC on a quarterly basis.

He said the committee also approved increased bonus — $0.25 per million British Thermal Unit – on production of marginal oil and gas finds over and above the prices for conventional gas production.

Talking about the LNG import, the adviser said the ECC was informed by his ministry that one of the bidders – Pakistan Gas Port of Iqbal Z. Ahmad – submitted its bid for 400MMCFD of LNG import 20 minutes after the deadline, but it was accepted by the SSGC despite objections by two other bidders. He said the PGP raised objections over the bid bond submitted by the Global Energy International Pakistan saying the bond issued by the National Bank of Pakistan was slightly lower in Pak-rupee than the State Bank of Pakistan’s exchange rate.

This left the third contender – Engro Corporation – as the single bidder. As a result, the board of SSGC passed a resolution to declare all three bids non-compliant allegedly under Public Procurement Rules 2004 owing to minor deviations.

Dr Asim Hussain said the ministry placed the matter before the ECC to either condone the ‘minor deviations’ and let the SSGC continue with the process or allow re-bidding to provide an opportunity to all to remove their deviations and comply with procurement rules. At the same time, he warned the ECC that import of LNG would not be possible as long as procurement rules were in place because LNG deals were finalised through negotiations throughout the world and not through bidding.

“The PPRA rules are too stringent and need to be revisited,” Dr Asim said. The rules were introduced 10 years ago and could not be allowed to go on forever. He confirmed that a senior official of the PPRA who was invited to the meeting explained that procurement rules did allow award of contract on single bid basis, but the committee decided to avoid more controversy given the fact that another round of bidding was just round the corner.

He said the second round of bids for another 400MMCFD of LNG import, due to be opened on Feb 15, would now be treated as the first round and existing bidders would be able to participate in it. The SSGCL had invited separate bids for two rounds of 400mmcfd of LNG import each with bid opening deadline of Jan 9 and Feb 15. The first round became controversial on the opening date.

He said the ECC constituted a committee, led by federal minister Changaiz Khan Jamali, to recommend disciplinary action if SSGC had committed any wrongdoing or violated procurement rules.While reviewing the gas supply mechanism, the ECC also discussed a request of the water and power ministry to raise gas supply to powerplants on the Sui Northern grid to cope with increasing electricity loadshedding and higher generation cost.

The ECC agreed that the gas companies should be allowed to manage gas load on their own, while observing general priority order including curtailment programme. It was decided that the first priority order will be given to domestic and commercial sectors. The power and general industries sectors will be accorded second and third priority respectively, followed by cement and CNG.