PLL to spurn directive of opening commercial offers for LNG supply

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ISLAMABAD: Pakistan LNG Limited (PLL) is reluctant to open commercial offers made by bidders for the supply of 240 liquefied natural gas (LNG) cargoes worth $6 billion over a period of 10 years.

The Petroleum Division has asked PLL to open commercial offers, however PLL is unsure in the absence of firm demand from Sui Northern Gas Pipelines Limited (SNGPL) on a “take or pay” basis, reported The Express Tribune.

The Directorate General of Liquefied Gases of the Petroleum Division, in a letter sent to the PLL managing director, said the competent authority had decided to proceed with the opening of tender offers. “PLL is requested to take further necessary action accordingly,” he said.

However, in its response, PLL said it “being a separate legal entity operates under the ambit of its board of directors and is required to abide by the board’s directions”.

PLL, in a letter sent to the Ministry of Energy (Petroleum Division)’s Directorate General of Liquefied Gases, said the issue was also taken up in a board meeting on October 7.

The board considered the 10-year LNG tender in the absence of any long-term demand on a take or pay basis from SNGPL as communicated by the gas utility in its letter on September 20, 2019 and considering the overdue receivables of Rs40 billion to be paid by SNGPL, said the report.

It was concluded that PLL was not in a position to award the contract. Without any prospect of award, it said, the opening of commercial offers in a major international tender of around $5-6 billion may cause a substantial reputational damage to PLL as well as the LNG sector as prices offered by the bidders would be made public.

According to the report, Special Assistant to Prime Minister on Petroleum Nadeem Babar said the cabinet had issued directives for floating the tender. “Nobody will force anybody to buy LNG if not needed. Opening a tender does not mean award. Last month we opened a tender for 10 cargoes but awarded contracts for only three,” he said.

“Issue is not the award. If it is not needed, it will not be ordered. But you don’t do a tender, extend it and then don’t open it, when there is a direction by the cabinet. You open it, you report to the cabinet and then reject it, if not needed, after informing the cabinet. Otherwise, you are ignoring the cabinet,” the special assistant was quoted as saying.

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