SC annuls LPG quota accord

| Orders FIA to probe matter, fix responsibility

ISLAMABAD - The Supreme Court Wednesday ruled that the Implementation Agreement between Sui Southern Gas Company Limited (SSGCL) and Jamshoro Joint Venture Limited (JJVL) was in gross violation of the bidding process, as advertised and as set out in the tender documents, including instructions to bidders.
The Federal Investigative Agency (FIA) was directed to inquire about the agreement, identifying all those responsible for the failings and point out acts of criminal negligence, corruption or other offences.
The FIA was also directed to also investigate any matter which may come to light from examination of any documents and records during the course of primary investigation, and submit its report within 30 days.
Reportedly, NAB ex-chairman Munir Hafeez, former Punjab Governor Gen (r) Khalid Maqbool, former Interior Minister Lt-Gen (r) Moinud Din Haider, National Bank of Pakistan ex-President Syed Ali Raza, Major (r) Ishtiaq Asif and Bushra Aitzaz were the main beneficiaries of the JJVL.
The judgment said the project was awarded by SSGCL in a highly non-transparent manner with the object of giving undue benefit to JJVL, a marketing company of the liquefied gas. It said: “The agreement cannot be allowed to continue being based on illegalities from its very inception and is accordingly set-aside with all consequential liabilities as are provided in the ‘corrected draft’ Implementation Agreement dated 19-5-2003.”
All losses caused to and incurred by the state, SSGCL and the people as a result of the bidding process and during the tenure of Implementation Agreement are to be recovered from JJVL and all persons who had actively participated and had made substantial decisions in the bidding process and making of the implementation agreement must be held accountable, the court said.
A three-judge bench headed by Chief Justice Iftikhar Muhammad Chaudhry after hearing Federal Minister for Petroleum and Natural Resources Khawaja Muhammad Asif’s petition had reserved the judgment in October this year. Khawaja Asif had filed the petition at the time when he was an MNA of opposition party (PML-N) in the national assembly.
The agreement in question was awarded to JJVL on 12-8-2003 to ‘Build Operate and Own’ an LPG extraction plant at Jamshoro. The changes in the implementation agreement were made with the object of giving unfair and unlawful benefit to JJVL at the cost of the State, State enterprise SSGCL and ultimately, the People of Pakistan.
The petitioner maintained that the deletion of clause 18 of the implementation agreement and its substitution by a vague and meaningless clause was at the behest of JJVL and for the benefit of JJVL and its lenders at the expense of the general public interest. The basis for calculating royalty payments, which had specifically been agreed, was unlawfully altered to provide benefit to JJVL and heavy loss to SSGCL, the state and ultimately to the people of Pakistan, he said in the petition.
The judgement said that a committee comprising former Ogra Member MH Asif, Shabbar Raza Zaidi, Partner of M/S AF Ferguson and Co., and chartered accountants be constituted to calculate royalty payments (on the LPG extracted to date) on the basis of the Saudi Aramco reference price plus freight, for the full period during which the agreement has been operational. The committee would complete the task within 15 days.
The committee is also to determine acquisition price for the LPG extraction plant, as nearly as possible in accordance with the LOI dated 28-6-2002 and clause 18 read with Schedule 5 of the draft implementation agreement dated 19-5-2003 relating to JJVL Event of Default.
It has also been directed to suggest a management mechanism to the court for appropriate orders including, if necessary, for the appointment of an independent manager/receiver. “This may be done within 15 days of this (court) order and until then the plant shall be managed by two senior persons, one each to be nominated by SSGCL and JJVL respectively, (and) any deadlock between them shall be resolved by a decision of the committee”. The committee would also suggest ways to streamline the supply of LPG to end consumers woes. The SSGCL and JJVL were ordered to fully cooperate with the committee for collection of required information and data.

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