Another informative article on the issue by Munawar B. Ahmad:
The Supreme Court’s suo moto hearing of the much sensationalised $1 billion scam alleged in the award of the LNG contract to GDF-Suez, may or may not determine if indeed there was a scam. The NA Committee report was hurriedly compiled under “secrecy” and without media coverage in a weeks time. The report of the NA committee, it appears, was an exercise in “scratching each other’s back”, so the committee in its report has actually supported the official version that GDF-Suez bid was the lowest. While this may be factual, the fact that the original recommendation by MP&NR to ECC was in favour of Shell, has been conveniently sidetracked.

The debate of whether there was an intentional incorrect recommendation, or a scam which would cost the people of Pakistan an extra $1 billion (is this for 1-year, 5-year or 20-year supply) will go on, and the SC may not be able to fathom the factual position, without having access to the recorded facts or the assistance of an expert. It has also been reported that the former Finance Minister has already written to the SC to scrap the deal only on the basis that he was not fully informed of the various proposals. This again may not be the most prudent action, without assessment of the full RFP process carried out by SSGC for the original bids received on June 15, 2007.
The original RFP for Mashal LNG was floated on February 17, 2007 as an “Integrated Project”. Out of seven prequalified bidders, only two bids, namely from Shell Gas & Power, and 4-Gas, in partnership with Vitol and Fauji, were received. The most compliant proposal of 4-Gas was recommended for award after a robust diligence and evaluation of the proposals by SSGC, assisted by the world class consultants “Poten and Partners”.
The question that we hope the Supreme Court will ask is, why in the face of a crisis situation, the award was nor processed in 2007-2008, which would have enabled set-up of the fast-track option in Phase I through a floating storage terminal in PQA channel/Bundal Island/Khiprianwala Island. This would have provided at least 300 mmcfd gas in 2009-2010, and greatly helped cover the current natural gas supply-demand gap. Subsequently, in Phase 2, the selected company was to put up the full land based terminal for 500 mmcfd /3.5 mtpa LNG supply.

Also PPRA rules clearly require that in the event a ToR and project requirements are changed after receipt of bids, then the process is subject to re-tender. Then why did the MP&NR decide to unbundle the “integrated project” and call for “new bids” from some “select” companies without a proper RFP or clear ToR. Neither Vitol, nor GDF-Suez were bidders in the original proposals for the “integrated project”. Then again, why were SSGC, which was formally designated as the Project Developer/Facilitator and the expert consultants, “Poten and Partners” excluded from the contract/price negotiations? A “New Committee” was set up but the new members cannot claim to have any credible expertise in LNG contracts and price negotiations. So how could they successfully conclude an appropriate LNG contract worth billions of dollars.
It is amply evident that whereas the current claims and clarifications, of “billion dollar losses” get thrown around, the real issue of gas/LNG supply crisis will be sidetracked, much like the power crisis. The nation cannot afford another Kalabagh in the form of a stalled LNG import project. LNG supplies thru LNG 1 and LNG 2 were an essential part of the “Energy Gap Coverage Strategy” formulated by the undersigned in the 2005 National Energy Plan in the timeframe of 2009-2012. A total of 1 bcf of natural gas thru RLNG was envisioned to supplement the local supplies. Without such supplies (already delayed by over 2 years) we are clearly headed for acute gas loadshedding, which will have an even worse fall-out than the electric power load shedding.
The ill-conceived unbundling of the project has led to mass confusion amidst lack of transparency and LNG supply agreements based on “higher than market” prices in the current “buyers market” where LNG contracts are under severe downward pressure. In reality the proposed contract prices may result in long-term losses far exceeding the “1 billion dollars” benchmark.
The nation can now only plan to live with massive gas loadshedding, which has already started on an upward spiral. Will anyone accept the responsibility for this new crisis? Or are we doomed at the hands of incompetence and bad governance.

See also, report from Dawn about Shaukat Tarin’s statement to Supreme Court

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