Economic Co-ordination Committee (ECC) of the cabinet has directed the Petroleum Ministry to immediately re-initiate the process to import Liquefied Natural Gas (LNG) in a transparent mode, after scrapping the contract with 4Gas.
Official documents exclusively made available to Business Recorder reveal that the ECC was apprised on January 25, 2011 that in compliance with the judgement of the Supreme Court of Pakistan, two summaries titled 'Pakistan LNG imports - short-term LNG project' and 'Pakistan Mashal LNG project', were considered by the ECC in its meeting held on July 20, 2010.
The committee directed that the views of the Ministry of Law and Justice may first be obtained to ensure that the proposal submitted by the Petroleum Ministry was in conformity with the directions of the court. Besides, the Ministry was asked to reaffirm that the price offered by 4Gas was competitive and also satisfy itself about the financial health of 4Gas.
The documents suggest that Petroleum Ministry was also directed to resubmit the proposal to the ECC, after having met the directives of the committee. Accordingly, the matter was referred to the Ministry of Law for its comments/views. The matters regarding the reconfirmation of best price offered by M/s 4Gas and its financial health were referred to M/s Sui Southern Gas Company (SSGC).
According to sources, SSGC's consultants Poten and Partners confirmed that the LNG price offered by 4Gas is competitive. They also confirmed the financial health of the firm. 4Gas is an independent company dedicated to developing and operating LNG import and regasification terminals.
4Gas company's objective is to establish a terminal network that will play a crucial role in fulfilling the increasing needs of countries and companies for access to natural gas and that will provide LNG producers' access to multiple markets on a global scale. The company is developing terminals in continental Europe, North America and Asia.
The documents further suggest that Ministry of Law partially endorsed the proposal of Petroleum Ministry to create competition and advised that a fresh process for the selection of a developer for the second LNG project may be initiated. Whereas in respect of 'Pakistan Mashal LNG project', Ministry of Law argued that since no document was attached with the reference to support the proposals by the referring Ministry, hence, the proposals of Petroleum Ministry were not confirmed.
According to the documents, Petroleum Ministry again referred the matter along with essential documents to Law Ministry considering that non-production of documents might lead to an inconclusive advice by Law Ministry. Petroleum Ministry had also requested that in case of disagreement, the issue might be referred to the Attorney General of Pakistan for his opinion. In response, Ministry of Law after going through the documents, submitted by the Petroleum Ministry refused to change their earlier advice contained in their letter of July 28, 2010.
In the last meeting of ECC, Petroleum Ministry requested approval of the proposals, which they had submitted in their earlier summaries to the committee. The ECC observed that laws of the land should be followed to ensure transparency and fairness. Therefore, the advice rendered by law division needs to be followed strictly. Nevertheless, the ECC duly appreciated the efforts of the Petroleum Ministry in preparation of the LNG projects. However, after detailed deliberations, ECC directed the Petroleum Ministry to expedite steps to complete the process in a transparent manner to meet shortage of gas in the country.