ECC allows non-competitive tendering for LNG terminal, defers proposal to ban wheat exports

Published July 4, 2019
Participants of ECC meeting express serious concern over rising prices of essential commodities. — APP/File
Participants of ECC meeting express serious concern over rising prices of essential commodities. — APP/File

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday allowed setting aside procurement rules to induct a consultancy firm for third LNG terminal and deferred, for the third time, a proposal to ban wheat export unless provinces control their smuggling as prices go up.

The ECC meeting, presided over by Adviser to Prime Minister on Finance & Revenue Dr Abdul Hafeez Shaikh, also ordered the authorities concerned to shift some oil movements through Pakistan Railways to help it stand on its feet.

Informed sources told Dawn that some participants of the meeting expressed serious concern over rising prices of essential commodities, particularly wheat and flour prices, affecting the common people. The meeting noted that the prime minister had also shown his displeasure over increasing prices and it was very important to control at least the prices of staple food.

The Ministry of National Food Security & Research has been seeking a ban on wheat export as prices of wheat flour had increased by 10-15 per cent over the last few months. Some noted that simply announcing a ban on these exports may be counter-productive as prices were mostly driven by smuggling which could not be controlled without proactive action from the provincial governments.

At the same time, ECC also observed that price control was a provincial subject and the respective governments should take effective measures through monitoring, market committees and district administration to ensure that prices are not manipulated.

It was, therefore, decided to call an immediate meeting of the Price Monitoring Coordination Committee to take up the matter with provincial authorities for an effective response to price hike. It will be presided over by Dr Shaikh and held on Tuesday (July 9) in order to work out a strategy in this regard and explore how the federal government could contribute.

LIQUEFIED NATURAL GAS TERMINAL: The meeting was given a presentation on estimated gas shortfall next year and the Ministry of Maritime Affairs (MMA) emphasised about the urgency of establishment of third terminal at Port Qasim Authority (PQA) so as to meet gas shortage in the country in the years ahead. It was reported that the shortfall next year could go beyond 1.5 billion cubic feet per day. It also requested exemption from Public Procurement Regulatory Authority (PPRA) rules that required open bidding.

Some participants recalled that ECC had ordered in February this year to conduct a study for the location of third LNG terminal and the relevant authorities appeared to have not made any progress towards that direction and the government was being put in a situation to bypass open bidding.

However, in order to expedite the process of establishment of 3rd LNG terminal, the ECC approved the resolutions of PQA’s board by exempting it from public tendering for appointment of legal consultant through negotiated tendering.

The committee also approved the resolution of board to allow amendment in PQA master plan to accommodate for the prospective 3rd LNG terminal. The meeting was reminded that in its decision in February 2019, ECC had directed MMA to expeditiously work on setting up of an additional terminal.

It was reported at the time by MMA that the selection of current location of LNG processing terminals was inappropriate to begin with because of channel’s constraints in terms of maneuverability of the ships and low draught conditions. In many cases, LNG ships blocked the traffic of normal shipping lines in view of security procedures and in some cases normal traffic, including those of oil products remained suspended for weeks.

Moreover, it was explained that port authorities had dedicated a new location for the future LNG terminals and were no more allowing any terminal at the existing Port Qasim site. In fact, port authorities wanted relocation of existing terminals to the new site because of safety, security and operational reasons.

The then chairman of ECC, Asad Umar, had directed the ministries of energy and maritime affairs to conduct a comprehensive study regarding the future requirements of LNG based on demand and supply situation so ECC could take a considered decision about the location of existing or future LNG processing plants.

OIL MOVEMENT: The ECC also directed the petroleum authorities to divert additional oil supplies to Pakistan Railways to help it reduce financial losses.

The meeting was told that movement of oil products was currently taking place through pipelines and oil tankers even though railway’s transportation cost was 20-25pc cheaper than trucking.

Petroleum Division briefed the committee about the utilisation of railways services for transportation of petroleum products to upward country. It was noted that there were some limitations with railways regarding unloading facilities and it would be crucial for it to overcome those before commitments could be made.

The committee, however, directed the Petroleum Division to divert the surplus business that was now coming up with increasing consumption to Pakistan Railways because it offered the lowest freight charges as compared to other modes of transportation.

Published in Dawn, July 4th, 2019

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