Oil and Gas Regulatory Authority in its annual Audit Report 2021-2021 has highlighted that Delays in tenders for import of liquified natural gas (LNG) and the conclusion of LNG contracts with Pakistan LNG Limited (PLL) at higher prices led to losses of 10.6 billion rupees for the 2020-2021 financial year.
High LNG prices and recent gas shortages in the country are the results of PLL’s short-term strategy to purchase LNG from spot market.
During the FY 2018-20, it was found that PLL management had made a proposal for six shipments to be delivered on January 8, 2021, 1 February 2021 against the order sent by Sui Northern Gas Pipeline Limited (SNGPL)
Bids were opened on December 10, 2020, while no prices were received from suppliers for three periods from January 20, 2021, to February 1, 2021.
The cheapest deals were received from Qatargas at very affordable prices.
Management again floated tender, citing exception clauses in the PP rules, but received bids at normal prices.
However, despite receiving the SNGPL request on time and importing the January delivery, PLL management did not accept bids on time due to the shortened delivery time.
The government ended up paying high prices for LNG and led to gas shortage as well.
This resulted in losses of Rs 1.3 billion.
In the second case, management opened bids for spot LNG procurement between November 2020 and December 2020 and awarded contracts at $ 6.78 per MMBtu.
In June-December, LNG prices were $ 4.38 per million Btu, but the LNG cargo was not purchased to take advantage of the lower prices.
This resulted in a loss of PKR7.7billion.
Due to poor management and unnecessary delays, bids were awarded at a higher price.
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