ISLAMABAD, Dec 4: The Supreme Court held on Wednesday that the 2003 LPG extraction plant licence issued to Jamshoro Joint Venture Limited (JJVL) was non-transparent, tainted from its very inception and geared towards advancing benefits and unfair advantage to the joint venture.

“Thus it is clear that the implementation agreement (IA) was entered into in a non-transparent and highly questionable manner, resulting in undue benefit to JJVL and very heavy losses to state enterprise SSGCL and consequently to the people of Pakistan,” said a 23-page verdict authored by Justice Jawwad S. Khawaja.

A three-judge bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, had in October closed the proceedings on a petition filed by Khawaja Mohammad Asif who, as then opposition member in the National Assembly, had challenged the grant of LPG extraction plant licence to JJVL. Iqbal Z. Ahmad is chairman/CEO of JJVL.

LPG (liquefied petroleum gas) is used by people who cannot obtain natural gas or live in far-flung areas.

The verdict said the Aug 12, 2003, implementation agreement, awarded by the Sui Southern Gas Company, should not be allowed to continue as it was based on illegalities from its very inception.

Setting aside the agreement with all consequential liabilities, the court ordered recovery of all losses caused to and incurred by the state, SSGCL and the people arising out of the bidding process and during the tenure of IA. The loss has to be recovered from JJVL and all those who prepared the IA, took substantial decisions and participated in the bidding process.

The court also ordered constitution of a two-man committee, comprising former Ogra member M.H. Asif and Shabbar Raza Zaidi, partner of chartered accountants AF Ferguson and Co.

The committee is required to calculate royalty payments (on LPG extracted to date) on the basis of Saudi Aramco reference price plus freight for the period the implementation agreement was in operation. The task will be done within a fortnight from the date of the order. However, opportunity of hearing will be afforded to SSGCL and JJVL during the calculation. The committee will also determine an acquisition price for the LPG extraction plant as nearly as possible in accordance with a June 28, 2002, LoI (letter of intent) and clause 18 read with schedule 5 of the draft IA of May 19, 2003, relating to JJVL. The job will also be done in 15 days.

The committee will suggest a management mechanism to the court for appropriate orders including, if necessary, for the appointment of an independent manager/ receiver. This will be done in 15 days and until then the extraction plant will be managed by two senior persons, one each to be nominated by SSGCL and JJVL. Any deadlock between them will be resolved by a decision of the committee.

The committee will obtain from SSGCL and JJVL data for the committee to fulfil its responsibilities and to suggest ways in which the supply of LPG to consumers continues without disruption.

The court ordered the FIA to investigate the matters highlighted in the verdict and submit within a month a report identifying people responsible for the acts of criminal negligence, corruption and corrupt practices or other offences.

The verdict said: “SSGCL is a state enterprise in which the majority shareholding is held by the government, therefore, not free to deal with such assets whimsically or in utter disregard of the fiduciary duty owed to the nation.”