ISLAMABAD: The petroleum division has decided to approach NAB to investigate Rs10 billion worth of Pak-Qatar LNG deal signed by the previous government of Pakistan Muslim League Nawaz (PML-N) was inked without the approval of the federal cabinet and the economic coordination committee of the federal cabinet.
Earlier, an initial inquiry launched on the advice of Ghulam Sarwar Khan, present minister for petroleum division to scrutinise Pakistan-Qatar LNG supply deal inked during the previous government of PML-N has disclosed strict terms and conditions of the agreement. And, as per the details of the initial inquiry, the former PML-N government had signed two agreements for LNG supply during its tenure, ostensibly to fill the energy shortfall.
The first deal of LNG supply was made in March 2015 between PSO and Qatargas Operating Company Limited for the supply of Rs10 billion worth of four LNG cargos on an expensive spot rate while the second deal was inked in February 2016 between PSO and Qatar Liquefied Gas Company Limited for 15 years. The incumbent regime of Pakistan Tehreek-i-Insaaf (PTI) can itself neither put an end to this 15-year LNG supply deal with Qatar without the consent of Qatar nor it (PTI) alone can renegotiate a reduction in the price of Qatari LNG deal.
Sources at the Petroleum Division informed that it will approach the National Accountability Bureau (NAB) for an investigation into the LNG supply deal between Qatar and Pakistan in PML-N tenure. They said NAB will facilitate in probing the deal. They also said that the acting managing director (MD), PSO, Shahid Islam had unlawfully signed the agreement on the advice of Shahid Khaqqan Abbasi, the then minister for petroleum in March 2015. They said neither an approval of the federal cabinet was solicited prior to signing the deal nor federal cabinet’s economic coordination committee (ECC) was approached for seeking its nod. Also, purchase of LNG from Qatar through tender could save approximately Rs970 million but the purchase of LNG was made on an expensive spot rate from a Qatari company, said sources.
Available copy of Master FOB (Freight on Board) LNG Sale and Purchase Agreement between Qatargas Operating Company Limited and Pakistan State Oil Company (PSO) Limited has disclosed surprising terms and conditions for the deal.
As per the agreement, the price of each cargo of LNG will be different which will be mentioned in the confirmation notice. And, PSO is made bound to provide bank guarantees of each cargo to Qatargas. And it (Qatargas) will issue the invoice after three days to the loading of LNG cargos. More, in case of no LNG purchase from PSO, the buyer (PSO) will have to pay full price of the cargo, which it had earlier confirmed to the seller (Qatargas).
Furthermore, in case of no purchase after passing three days to the confirmation of PSO, Qatargas will suspend the supply. Also, the restoration of LNG supply will be made after clearance of full payments with a penalty.
Similarly, PSO is bound to clear the payments within 5 to 10 days after the loading of LNG cargos while in case of no payment within due days, then PSO will have to bear two (2) percent additional interest on base interest rate as penalty. And, in case of financial crisis, PSO will inform to Qatargas immediately, while if Qatrgas fails in supplying LNG to PSO, then it will pay fair amount to PSO. However, the agreement will expire in case of war, flood, civil disobedience and emergency that will continue for 30 days. Qatar can put an end to the deal on 90 day notice.
It is also learnt from the Master FOB LNG sale and purchase agreement that implementation on this LNG supply deal will be made as per England and Wales laws and laws of US congress for investment will not be applicable.
Any disputes, controversy or claim arising out of or in relation to the deal, or the breach, which cannot be resolved by discussion in good faith between the parties within 60 days of the party giving notice of such disputes shall be settled by arbitration under the UNCITRAL (United Nations Commission on International Trade Law) Rules of arbitration in force on the date of the dispute.
