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Pakistan LNG deal mired in scandal

LNG Industry,

The actual deal between GDF Suez and Pakistan’s Petroleum Ministry, was approved in February by the Economic Co-ordination Committee (ECC). The deal for the supply of 3.5 million tpa of LNG for 20 years is worth US$ 26 billion. However, it is alleged that a lower joint bid of US$ 25 million by the Fauji Foundation and Vitol, a Dutch company, was completely ignored.

In fact it has emerged that the Fauji/Vitol bid was not even presented to the ECC, who were making the final decision. This only came to light after the Lt General Rab Nawaz of the Fauji Foundation called Shaukat Tarin, the then head of the ECC and Pakistan’s former Finance Minister, to find out why his company’s joint bid had not been entertained.

The head of Pakistan’s Petroleum Ministry, Naveed Qamar, has denied all these charges though and stated simply that the bid from Fauji Foundation and Vitol did not suit the requirements of the project.

The joint bid was only offering half the 3.5 million tpa required and only for a five-year contract. Pakistan is currently suffering a severe energy shortage, which has also led it to also sign a deal with Iran for the construction of the IPI pipeline to supply them with natural gas.

The contractors’ inability to supply the requisite amount of LNG has been cited as the reason its bid was not disclosed to the ECC. If this is true, then it might just be a case of sour grapes from the Fauji Foundation. However, in a country where corruption is not unknown, the matter is being taken very seriously indeed. The whole affair is now being investigated by the National Assembly standing committee on Petroleum natural resources, to determine if there was any wrongdoing in the decision not to disclose the Fauji Foundation/Vitol bid to the ECC.

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