ISLAMABAD: The Board of Public Procurement Regulatory Authority (PPRA) has quizzed Sui Southern Gas Company LPG Pvt Limited (SLL) on its plan to procure used bowsers without appropriate justification.
On April 7, 2023, PPRA Managing Director (MD) presented the agenda item and informed the Board that Ministry of Energy (Petroleum Division), in its letter of March 31, 2023 requested to allow exemption to Sui Southern Gas Company (SSGC) LPG Pvt. Limited (SLL) from clause 18 of general terms and conditions of the PPRA bidding documents for procurement of used bowsers subject to observing transparency and fair play throughout the process and meeting all other codal formalities.
He further highlighted that currently SLL has a fleet of 15 bowsers and they intend to expand this fleet through procurement of used bowsers as aforementioned, if allowed.
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The representative of Petroleum Division informed the Board that the Petroleum Division had recommended that SLL may like to procure good condition used bowsers from the market to save time and cost. However, SLL has stated that procurement of used bowsers is not permissible under the Public Procurement Rules, 2004.
One of the Board Members pointed out that considering demerits of the used product SLL may like to procure a new bowser having quality and safety standards and that would serve its useful life.
Another Board Member highlighted that SLL claims used bowsers would have a useful life of more than 15 years. He further narrated that if these used bowsers are so good then why suppliers are selling them so cheap.
The Board Member further argued that the private sector supplier who has imported the used bowsers and made an entrepreneurial effort would definitely charge a premium on that product.
Another Board member pointed out that the Board had allowed procurement of used ships where international authorities have established that the useful life of a ship does exist whereas in case of used bowsers there is no such authority to establish their useful life. He further added that in case of malfunction how one would be able to justify the procurement.
Secretary Finance/ Chairman PPRA Board invited MD SLL to provide further justification. MD SLL argued that because of higher inflation and USD forex rates, a brand-new Bowser will cost around Rs 16 - 18 million and requires at least eight months lead time in delivery. On the other hand, used Bowsers are available for sale in local market at around Rs 10 million per bowser and will have a useful life of more than 15 years.
He further explained that a few marketing companies that are no more in the LPG business now are offering the used bowsers which are as good as new being two to three years old. Moreover, after selecting an Agency through open competitive bidding, SLL will ensure to check licences of these companies and their products and will chose a product with maximum useful life.
Secretary Finance/ Chairman PPRA Board observed that these are general statements and added that it would have been better had SLL made these justifications a part of the working paper, as well. In the absence of such justifications, the Board is not comfortable in recommending exemption to SLL for procurement of a used bowser which could be risky and life threatening.
Secretary Finance pointed out that SLL needs to explain the required standards for this procurement and the authorities must check those standards.
Another Board member seconded the notion of the chair and observed that the Ministry should bring agenda item with full justification for PPRA Board consideration as the written agenda item does not support the verbal arguments and justifications provided by SLL.
Another Board member maintained that SLL should also make a comparison of their current fleet of bowsers vis-à-vis procurement of it through open market as a part of their agenda.
The Board decided to defer the agenda and directed SLL to bring the agenda through Petroleum Division with full justifications containing the observations made by the Board members including the required standards for this procurement and the Authorities to check those standards. Moreover, SLL shall also make a comparison of their current fleet of bowsers vis-à-vis procurement of it through open market.
Copyright Business Recorder, 2023