5 dollar bn PSO contract given to favourites: TIP

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ISLAMABAD: The five billion dollars contract of blended oil awarded by Pakistan State Oil (PSO) to a favourite contractor without open tendering has been severely criticized by Transparency International Pakistan (TIP) and the prime minister has been asked to take notice of this grave violation.

The Transparency has also apprised the PM of another violation done by PSO while awarding affreightment contract to Pakistan National Shipping Corporation without following the Public Procurement Rules.

The TI-Pakistan has referred to its previous letters on allegedly illegal Contract of Affreightment (COA) signed between PSO and PNSC, which were never responded by PSO.

“PPRA has also questioned PSO on 19th October 2012, to submit its report on the allegation of illegal award of unsolicited contract to PNSC, and has also informed PSO that “Unauthorized breach of any rule of the Public Procurement Rules 2004 is amounting to mis-procurement”. The PSO has also failed to justify the alleged illegal award of contract to PPRA till date, says TI letter to PM.

The allegation needs to be taken seriously by the prime minister, as PSO is continuing the practice of awarding illegal contracts, and have also awarded another unsolicited contracts of $5 billion dollars 5 years contract of PSO to M/s Bakri Trading for so-called blended oil, it adds.

“The SECP has also objected PSO on the alleged illegal awarded contact to PNSC, vide letter dated 5 Nov. 2012, PSO has been questioned on the alleged illegal contract between PSO and PNSC, and has asked for reply, to whether any unsolicited contracts were awarded by PSO, and their legal standing under the laws and regulations of Pakistan, applicable on PSO. The SECP has also asked PSO for their compliance in relation with key factors identified by the Supreme Court in its RPP Judgment of 30th March 2012.”

Chairman PSO’s Board of Directors Sohail Wajahat when contacted by The News said that so far no transaction has occurred in blended oil contract. He mentioned that PSO is following PPRA Rules in all procurements and he too has sent the letter of Transparency International for comments from his management. Sohail maintained that the company would be investing in Pakistan and will supply blended oil whenever needed by PSO so there was no violation in it.

The letter has mentioned that another complaint has been received against PSO on another unsolicited contract awarded by PSO to M/s Bakri Trading for 5 years supply of blended oil to PSO on $5 billion. The complainant has made following allegations;

1. That managing director PSO cannot award any contract to any company without open tendering under the PPRA Rules.

2. That PSO Board of Director is also not authorized to award any contract to any company without open tendering under the PPRA Rules.

3. That Ministry of Petroleum, Government of Pakistan cannot give any contract to any company without open tendering under the PPRA Rules.

4. That M/s Bakri Trading is not the only company in market for supplying blended oil.

5. That to make this deal, an illegal competitive edge was given to Bakri Trading by documenting it as the one and only oil blending company in Pakistan.

6. That Managing Director PSO and M/s Bakri Trading have mis-informed government and public about blending facility is only available with M/s Bakri Trading, as it is available in Pakistan with many other trading companies which have storage facilities at KPT and PQA and also PSO has storage tanks and same blending facility.

7. That blending is a normal mandatory procedure and is in vogue in Pakistan since 1947.

8. That the blending facility is not a rocket science, as it is “The stored oil from one Oil Tank (as heavy components are settled at bottom and light components are at top) is transfer to another Oil Tank to make it homogenous at the time of delivery to tankers.”

9. That High Sulpher Oil price is determined at daily rate published by PLATTS, and contractors quote tendered cost of their mark-up for services over the costs of oil determined by PLATTS and average prices in Pakistan by refineries, and paid at the rupees parity rate of dollar at the date of supply.

10. That PSO has caused billions of rupees loss by awarding of this illegal contract at highly inflated non-competitive cost.

11. That PSO Board Audit Committee did not agree to award unsolicited contract to Bakri Traders in BAC meeting of 24 October 2012.

“The above allegations, reconfirmed by SECP and PPRA against unsolicited contract awarded to PNSC, and 11 allegations against contract awarded to Bakri Traders, are serious, and prima facie it appears the PSO under the New Managing Director has been guilty of violations of awarding of the two unsolicited contracts against the requirement of Public Procurement Rules, and also against the key factors to be considered in the procurement of public contracts identified by the Supreme Court of Pakistan in its judgment given on 30th March 2012 in the Rental Power Plants Case. The TIP requested the prime minister to take immediate measurers to cancel the two unsolicited illegal contracts awarded by PSO to M/s PNSC and M/s Bakri Traders. And accordingly measure against the PSO officers and Board of Directors held responsible for awarding of these two illegal unsolicited contracts which are deemed to be mis-procurement as pointed out to PSO by PPRA also”, the letter concludes.




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