ISLAMABAD: The top executive of a public sector firm — Pakistan LNG Terminal Limited (PLTL) — has been sacked for imposing penalties on a second terminal, which has delayed the processing of imported LNG since June this year.
A senior government official confirmed that Azam Soofi, managing director of PLTL, was sacked on Dec 15 by the company’s board of directors. He is said to have posted a second round of $300,000 per day penalties on Pakistan GasPort Limited (PGPL) for the continuous delay in commissioning of its LNG terminal beyond even a revised deadline.
The official said Mr Soofi had been replaced on a temporary basis by Adnan Gilani, the chief operating officer of another government entity, Pakistan LNG Limited.
PLTL — a company under the petroleum division — had earlier imposed a $30 million penalty on PGPL when its terminal did not come online in June, as originally committed. The company contested the penalty and the issue is under arbitration, even though Prime Minister Shahid Khaqan Abbasi has publicly criticised the penalty imposed on PGPL.
The second LNG terminal is crucial for the operation of three LNG-based power plants in Punjab, with a cumulative capacity of 3,600-4,000MW. These include Balloki, Bhikki and Haveli Bahadur Shah plants.
According to sources, Mr Soofi was called to the Prime Minister’s Secretariat last week and asked to either withdraw the penalty or resign. He declined both offers, contending that he was not ready to face accountability processes and would move, as required under the rules, unless ordered in writing to proceed by the forums concerned.
A hurriedly-called meeting of the board of directors on Dec 12 to consider Mr Sufi’s removal remained divided as there was disagreement among members over the legal merits and demerits of the proposed action.
The sources said the PM Office and the Ministry of Energy toiled hard over the next couple of days to secure a majority in the board, which ultimately sent the PLTL chief packing.
Mr Soofi is said to have imposed the penalty after the PGPL terminal suffered repeated problems and could not be commissioned by Nov 28, as required. The terminal’s three joints were reported to have collapsed on Dec 2, 8 and 10, respectively, as gas pressure built up.
Consequently, at least three ships carrying LNG and awaiting processing at the PGPL terminal were diverted and two other orders were deferred. PGPL, the official said, was liable to pay $300,000 per day for the delayed commissioning under the agreement. He said a deputy attorney general contesting the PLTL arbitration was also under pressure to go easy on the earlier penalty.
The post-commissioning delays entail penalties exceeding $10m in accordance with the contract signed and executed with PGPL. LNG consumers had earlier paid penalties to Engro Elengy at a rate of $272,000 per day through tariff when the government declared the commissioning of the first LNG terminal two years ago, while no upstream LNG purchase contracts were in place.
Resultantly, RLNG consumers and Sui Southern Gas Company had to pay over $2.5 per MMBTU for re-gasification, instead of the original 66 cents.
This effectively means that two ‘blue-eyed’ officers of PM Abbasi – Mr Gilani and his immediate boss Mobin Solat – will run four companies under the petroleum division. Mr Solat is being tipped as full-time managing director of Government Holdings (Pvt) Limited (GHPL) – the parent company of the PLTL and PLL.
He is now heading GHPL, Interstate Gas Company (ISGC) and PLL, even though former prime minister Nawaz ordered an inquiry against him after a former ISGC chairman accused him of record-tempering. Led by the then-foreign secretary, the inquiry held him responsible and sought a penalty against him.
At the time, Mr Abbasi – in his capacity as petroleum minister – had moved a summary to the prime minister to protect Mr Solat, and later gave him additional charge of two more companies – GHPL and PLL.
GHPL – created to own government shareholding in all oil and gas fields in the country – has tens of billions of rupees worth of funds collected through gas development charge and meets the financing requirements of PLL and PLTL – the newly created firms to deal with LNG imports.
Petroleum Secretary Sikandar Sultan Raja did not respond to repeated requests for comment.
Published in Dawn, December 18th, 2017