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More sleaze and corruption involving Shell

LNG scam: which top gun intervened on behalf of highest bidder?

Monday, April 12, 2010
By Rauf Klasra

ISLAMABAD: An intervention from the “top gun” sitting at the hills followed by two secret letters had actually landed the Petroleum Ministry officials in the LNG import scam, as the officials concerned were made to recommend the name of Shell for the award of a multi-billion dollar contract in the summary sent to the ECC after deleting the lowest bidder, Vitol/FF, despite the fact that the Shell bid was higher than its competitor by $1.5 billion.

A secret letter, No Met/354/40, dated February 4 (available with The News), written by Qatar’s Energy Minister Abdullah Bin Hamad to Petroleum Minister Naveed Qamar, pleading for the contract to be awarded to Shell, revealed how the Qatari government, only five days before the ECC meeting on February 9, was confident to getting this multi-billion dollar contract as the Qatari minister had even invited Naveed Qamar to visit Doha after February 9 to witness the signing of the agreement to import the LNG.

But, sources said, Shaukat Tarin put the spanner in the works when in the ECC meeting on February 9, he rejected the recommendations of the Petroleum Ministry to award the contract to Shell and, instead, awarded it to the GDF Suez. The source claimed that actually, this was the main reason behind the annoyance of the “top gun” sitting at the hills, which also led to the ouster of Tarin from office.

These two official letters of the global head of the LNG Shell, De Ia Rey Ventor, and Qatar’s Deputy Minister for Energy and Industry Abdullah Bin Hamad Al Attiyah, are being produced before the Supreme Court on Monday by the Editor Reporting of The News to further prove how massive irregularities were committed in the award of this contract and how political clout was used to make last minute changes in the official summary.

Both these letters were sent to Naveed Qamar on February 4, exactly four days before the dispatch of the official summary of the Petroleum Ministry to the ECC, recommending Shell for the award of the LNG contract in its meeting on February 9.

In addition, the Editor Reporting will also produce more evidence before the six-member SC bench, led by CJ Iftikhar Chaudhry, to substantiate the contents of his story published in The News on March 29. These documents include the official letter of Tarin to Petroleum Ministry Special Secretary GA Sabri, dated February 10, after he got a call from MD Fauji Foundation Lt-Gen Rab Nawaz, who had complained that his bid was the lowest but was ignored. Another letter was written by Sabri to Tarin on February 18, informing him that the petroleum minister had stopped him from giving any reason for ignoring the lowest bidder, FF/Vitol, on the ground that the minister would personally handle the matter. A copy of the Fauji Foundation/Vitol bid, claiming that it was the lowest by about $400 million from the GDF-Suez, would also be presented before the SC. Replies of Tarin, Finance Ministry, Petroleum Ministry and MD FF General Rab Nawaz to the notices issued on April 2 will also be submitted on Monday. Meanwhile, investigations revealed that after a careful scrutiny of the bids for the import of 3.5 million tons of LNG, the evaluation committee, headed by Sabri, was in favour of the FF/Vitol and the GDF-Suez for the award of contract. The FF/Vitol bid was cheaper for a five-year term, while the GDF-Suez was cheaper for a 20-year import contract. So, both were to be recommended for the contract. In the meantime, Shell came to know that its bid was being ignored and its chairman met one of the top guns of Pakistan to seek his help. Consequently, Minister for Petroleum Naveed Qamar received a letter, dated February 4, from De La Rey Venter, with a copy to the chairman Shell companies in Pakistan, Zaiviji Ismail.

In this letter (a copy of which is available with The News), Venter wrote: “I appreciate you spared time to meet my colleagues last week. My colleagues have further briefed me on the discussions you had with them this week. The open and frank dialogue that has taken place reflects the quality of the long-standing partnership between Pakistan and Shell. Having considered what you shared with us and in view of our understanding of your requirements, we wish by this letter to provide you with an amended proposal. We believe this accommodates what you require without forgetting the long-term supply security for Pakistan.”

In this letter, Shell offered to supply 2.5 million tons of LNG against the tender of 3.5 million tons for six years. The supply of LNG was to be made from Qatar. In the letter, after giving the new bid, Venter said: “Your Excellency, we have come a long way in our discussions. Shell and its upstream partner Qatar feel it is important at this juncture to have clarity and the commitment of the government of Pakistan on the key parameters. This is required in order to conclude the term sheet and continue discussions into the next details SPA stage on exclusive basis for these volumes. We wish you and your colleagues success in your deliberations next week and look forward to hearing your decision.”

On the same day, Naveed Qamar received another letter from Qatari Minister Abdullah Bin Hamad to further plead the case of his country’s partner Shell to enable it to win the deal. Abdullah, in his letter, wrote: “Excellency, I have been briefed by Shell, our main partner in Qatargas 4, on the progress of the discussions related to LNG supply to Pakistan from Qatar and have been encouraged by the professional and positive manner in which the government of Pakistan has conducted these discussions. Recent reports would suggest that a decision on the LNG receiving terminal has been taken in principle by you and your colleagues in the cabinet. I would like to congratulate you on achieving such a significant milestone on the route to LNG.”

He added: “I have been further briefed that GoP is in the final stages of selecting LNG suppliers. I am confident that the benefits of long-term supply from a reliable and stable nation will be fully and appropriately evaluated by you and your team. I place great emphasis on long-term partnership with the consumers of Qatari LNG and, consequently, hope to be able to welcome Pakistan into Qatar LNG ‘family’ in the near future. I very much look forward to a positive outcome from the conclusion of your decision-making process on February 9 and thereafter would be pleased to invite you to Doha to witness signing of the relevant documents in due course”.

The sources said when these two letters arrived at the ministry, the evaluation team was asked to “accommodate” Shell at all costs. The sources said after some typical bureaucratic resistance, the official summary to be sent to the ECC contained the name of Shell, which was the highest bidder. The name of FF/Vitol was replaced with Shell. The report of the consultant opposing the award of contract to Shell was thrown in the dustbin. They said the option was either to delete the name of FF/Vitol or GDF-Suez. But, finally it was decided to allow GDF-Suez to supply LNG for 20 years and Shell was recommended for five years. But, some insider leaked this information to Shaukat Tarin before the ECC on February 9. When the summary was presented before the ECC, Shaukat Tarin straightaway rejected the recommendation of the petroleum ministry to award the contract to Shell and instead awarded it to GDF-Suez. But the very next day, to his shock, Tarin got a call from MD FF General Rab Nawaz who told him that the FF/Vitol bid was not considered despite being the lowest.

Tarin wrote to the ministry of petroleum asking why it had never mentioned the bid of FF/Vitol in the official summary to the ECC. Tarin felt he was deliberately kept in the dark and subsequently he wrote to special secretary G A Sabari to explain why FF/Vitol bid was not mentioned in the summary sent to the ECC. After eight days Sabri sent in a brief reply saying: “Minister Naveed Qamar says he would handle the matter personally”.

Meanwhile, Tarin quit on February 28 and the whole issue was buried. But General Rab Nawaz wrote to PM Secretariat and even complained to ISI to investigate why the FF/Vitol bid was ignored. And thus the scam came to light.

But, despite availability of record, not a single member of NA body on petroleum asked Naveed Qamar, G A Sbari and other officials of ministry why it had recommended Shell for the award of this contract and why Shaukat Tarin had rejected their recommendation. As one insider put it: “The four-day meeting of committee was just an attempt to cover up the scam instead of digging out the facts.”


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