ISLAMABAD: The federal cabinet, through a circulation of summary, has approved exemption for SSGC-LPG (Pvt.) Limited (SLL) to import LPG spot cargoes, aiming to address the country’s severe gas shortages and maintain stable Liquefied Petroleum Gas (LPG) prices.
According to sources, the Cabinet Division, after getting the consent from Prime Minister Shehbaz Sharif, has obtained the consent of the cabinet members through circulation of summary to exempt SSGC-LPG (Pvt.) Limited (SLL) from the applicability of Rules 35 and 40 of the Public Procurement Rules, 2004, specifically for the procurement of LPG spot cargoes.
Under this exemption, SLL is permitted to procure approximately 20,000 Metric Tons of LPG per month from international suppliers, amounting to four cargoes each month, spanning from April 2023 to September 2023. The exemption aims to relax the timeframe between the announcement of the evaluation report and the contract’s award to the successful bidder, ensuring a fair and responsible opportunity for healthy competition among potential bidders.
Earlier, the Petroleum Division had requested the Public Procurement Regulatory Authority (PPRA) to grant exemptions to SSGC-LPG (Pvt.) Limited (SLL) from Rules 35 and 40 for the import of LPG spot cargoes from April 2023 to March 2024, approximately totaling 20,000 Metric Tons per month (four cargoes).
In the 70th meeting of the PPRA Board held on April 7, 2023, the board recommended granting exemptions to SLL, subject to certain conditions. The Board decision emphasized providing fair competition opportunities for potential bidders, redressal of grievances, and the publication of bid invitations in widely circulated Urdu and English newspapers.
It is relevant to note that the petroleum division, in September 2022, had given a task to both the sui companies i-e SSGC (through its subsidiary SLL) and SNGPL to import additional LPG during winter season from November 2022 to March 2023 to overcome the severe gas shortages in the country. The Ministry of Energy (Petroleum Division) also assisted SLL in obtaining exemptions of PR Rules number 8,9, 13 (1), 35 and 40 from PPRA. SLL in response took the lead and imported 67,771 MT LPG during last winter season. The regular LPG supplies to the local market not only helped in avoiding the artificial shortage of the product but also maintained the LPG prices well within OGRA announced prices.
According to available copy of SSGC LPG letter, LPG prices, locally as well as internationally, are vulnerable and change on a daily basis. The exemptions of rule no. 35 gave SLL an opportunity to procure LPG from international suppliers at par with the private importers as it reduced the risk of price change for both SLL and international suppliers. Exemption of rule 40 provided an opportunity for SLL to get the market competitive prices from these suppliers. As a result, SLL with the help of these exemptions, saved around US $ 918,600 amounting to around PKR 222 million in 12 consignments during the last winter season.
In order to continue this streak of importing LPG smoothly and cost effective, SLL needs to remain at par with the private importers. SLL, with the help of the exemptions of PP Rules number 35 & 40, will be able to continue the uninterrupted supply to the local market to avoid product shortages and keep LPG prices well within OGRA announced prices.
In the light of above justification, it is requested to grant SLL, exemptions in PP rule no. 35 and 40 for the import of LPG spot cargoes from April 2023 to March 2024 (approximately 20,000 MT per month), said a letter dated March 27, 2023 issued by Amir Mahmud, MD/CEO of SSGC LPG.
Earlier, the Board had recommended exemption from 1st November, 2022 till 31st March, 2023 which has expired and now SLL through their Ministry has requested for exemption till March 2024.
It is pertinent to mention here that to continue importing LPG smoothly and cost-effectively, SLL needs to remain competitive with private importers. The exemptions of PP Rules 35 and 40 allow SLL to procure LPG from international suppliers at market-competitive prices and reduce the risk of price fluctuations. This approach has so far resulted in significant cost savings during the previous winter season.
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