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Supreme Court scraps GDF Suez LNG deal

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Posted by on Wednesday, April 28, 2010, 18:12
This news item was posted in Business category and has 0 Comments so far .

The Supreme Court said the petroleum ministry had not taken awarding procedures seriously, and a decision by the government’s economic decision-making body in February to award the contract to France’s GDF Suez “shall be of no consequence”. The Supreme Court took up the case after media reports that Pakistan had lost $1 billion when senior Petroleum Ministry officials ignored the lowest bid by the Fauji Foundation, an investment group run by former Pakistani military officers, and European company Vitol, and chose France’s GDF Suez.

Ch Iftikhar

Ch Iftikhar

“This case has been disposed of with the hope that the matter will be handled more transparently,” Supreme Court Chief Justice Iftikhar Chaudhry told the court.

The petroleum ministry said in a letter to the Supreme Court it would re-submit a proposal made by Fauji and Vitol in July 2009 for the project to import 3.5 million tonnes of liquefied natural gas (LNG) a year, a deal estimated at $28 billion that has focused attention on transparency in Pakistan.

While some foreign energy companies may welcome the Supreme Court’s decision to look into the transparency of contracts, others could be discouraged by delays.

“Whenever anything is delayed, or in this case the government’s decision to review the LNG import contract, it bodes negatively in the minds of foreign investors as it does not show any consistency,” said one analyst.

The Supreme Court had said it had taken a notice of a Pakistani newspaper report on a “$1-billion LNG scam” Petroleum Minister Naveed Qamar has been quoted by the state-run APP news agency as saying the contract was made in a transparent manner.

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