Delay in floating tenders for import of the LNG spot cargoes and awarded contracts at higher rates by Pakistan LNG Ltd (PLL) resulted in losses of Rs10.6 billion in the financial year 2020-21.
High prices of the LNG and gas shortages recently witnessed by the country is a result of poor planning for procurement of spot LNG cargoes by the PLL.
This has been revealed in the audit report of the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) for the audit year 2020-21.
During the audit of the PLL for the financial years 2018-20, it was observed that the management floated tenders of six cargoes for delivery during January 8, 2021 to February 1, 2021 against a demand raised by the Sui Northern Gas Pipeline Limited (SNGPL) vide letter dated October 26, 2020.
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The tenders were opened on December 10, 2020 in which no supplier bid was received for the three slots between January 20, 2021 to February 1, 2021.
Lowest bids were received from Qatar Gas with potentially very viable prices.
The management again issued tenders for unfilled spots by invoking emergency clause of PP Rules but bids of record high prices were received.
The PLL had also imported its one-term cargo of January 2021 in September 2020.
Thus, despite timely receiving of demand from the SNGPL and advanced import of one term cargo of January, the management failed to issue tenders well in time due to which delivery window was reduced.
The country ended up paying high price of the LNG and unfilled slots would also aggravate the gas shortage.
That resulted in loss of Rs1.3 billion.
In another case, the management opened tenders of spot cargo in November 2020 for the month of December 2020 and awarded contracts at $6.78 per mmbtu.
The LNG prices were $4.38 per mmbtu in June for the December supply but the LNG spot cargoes were not purchased to get the benefit of lower prices.
That resulted in loss of Rs7.7 billion.
The report also highlighted that the PLL opened tenders for the import of LNG spot cargoes in July and August 2020 for delivery in the month of August 2020 and made the contracts at $2.23 and $2.29 per mmbtu.
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The management also opened tenders in August (for delivery in August) and September 2020 (for delivery in September) and awarded contracts at $3.63 and $4.65 per mmbtu respectively.
Due to mismanagement and unnecessary delay in tendering, the contracts were awarded at higher rates.
This resulted in loss of Rs1.6 billion to the national exchequer. The audit report observed that poor planning and tenders for the import of LNG were issued with delay at higher rates.
The management also failed to keep in view the historical consumption trend in winter season as well as price trend in the international market.