Transparency International Pakistan receives complaint against SNGPL

Transparency International Pakistan has received a complaint against Sui Northern Gas Pipelines Limited (SNGPL) regarding alleged discrimination and favouritism on its part by preventing the supply of gas to DH Fertilizers Limited (DHFL) and Engro Fertiliser Ltd, by diverting their quota to Pakarab Ltd, thereby causing loss of over Rs one billion per month and further resulting in shortage of locally manufactured urea, which is being imported at the expense of exchequer against precious foreign exchange. TI-Pakistan Adviser, Syed Adil Gilani in his letter sent to the Prime Minister on December 4 has requested the Prime Minister to take immediate action and order SNGPL to comply with the commitments made to Engro Chemical Pakistan Limited in the gas sale and purchase agreement of April 11, 2007 and to implement the Lahore High Court order directing the respondents, through an interim order of February 13, 2012, passed in the writ petition No 3310/2012 to supply gas to DHFL in accordance with the allocation policy and without any taint of discrimination. TI-Pakistan has summarised the allegations made by the complainant against SNGPL as follows: 1) That Sui Northern Gas Pipelines-based fertiliser plants, Engro and DH Fertilizers received gas for only 33 days of operations in the first six months of 2012. 2) That the company's urea sales fell 30 percent to 397,000 tons on a yearly basis due to gas supply issues, thus causing short manufacturing of 800,000 tons of urea fertiliser, which had to be imported by Trading Corporation of Pakistan (TCP) at higher cost of approximately Rs 30 billion, as well as by spending precious foreign exchange from Pakistan foreign exchange reserves. 3) That according to gas sale and purchase agreement of April 11, 2007, Article 3.1 (b), SNGPL is committed to supply Engro Chemical Pakistan Limited 100 MMSCFD specification gas, initially to be obtained by the seller from Qadirpur field under the Qadirpur GSA. And without effecting the seller's obligations under Article 3.1(a), if during the term the volume of gas available under the Qadirpur GSA reduces on a permanent basis below 100 MMSCFD, then the seller shall be obliged to supply any shortfall up to the guaranteed delivery of specification gas to the buyer from the transmission system of the seller (the "System") and to enable such supply the buyer shall be permanently switched to the system (the "Switch"). 4) That the Lahore High Court had directed through an interim order of February 13, 2012 ("Interim Order"), in the writ petition No 3310/2012 to supply gas to DHFL in accordance with the allocation policy and without any taint of discrimination. And further due to failure of SNGPL to abide with the court orders, and on filing of the contempt of court application, the Lahore High Court had passed an order on November 21, 2012 wherein para 6 states "DG GAS is directed to hold another meeting at 11 am on November 27, 2012 of all the stakeholders and pass an speaking order either evolving an immediate workable formula for supply of gas to members of fertiliser sector or then furnish detailed reasons for not doing it.". 5) That DG GAS, Ministry of Petroleum and Natural Resources, passed an speaking order on November 28, 2012 that after hearing of all the stakeholders including the petitioner he holds that in the interest of fairness and equity the understanding reached on May 8, 2012 should be followed in letter and in sprit and gas available for fertiliser sector whatever, whenever and wherever technically possible for operation of even single fertiliser plant should be given to the petitioner and other fertiliser plants on turn basis without any recrimination. 6) That in 2012 Engro Fertiliser was supplied gas for 45 days, and DH Fertilizers for 62 days, whereas Pakarab Fertiliser and Agritech Ltd were supplied gas by 100 percent more days for 107 days and 108 days respectively, which is a clear proof of the discrimination and favouritism. 7) That one of the major causes of the blatant violations of the High Court orders and SNGPL's contractual obligations is that the board has directors who are not allowed under the Securities and Exchange Commission of Pakistan (SECP) law to be there, and who are also involved in causing discrimination due to the alleged conflict of interest. Adil Gilani said: "it is to the credit of the Prime Minster, who since taking oath of his office on June 22, 2012, is successful in taking up governance issues on top priority basis, and has complied with all the judicial orders in letter and in sprit, and has taken prompt notice and acted against all the corruption complaints brought to his notice, e.g. CDA commercial plot sale, Golen Gol Project, and procurement of 75 Railway Engines from China". Transparency International Pakistan is confident, he said, that the Prime Minster will act urgently in this case to stop SNGPL from attracting contempt of court by discrimination, favour, fairness and equity, and also to comply with the court orders and the terms of contractual obligations it has towards Engro fertiliser. Transparency International Pakistan is striving for across the board application of Rule of Law, which is the only way to stop corruption, he said. Copies of the letter have been forwarded for information with the request to take action under the rules and regulations to address the alleged deliberate discriminatory acts of SNGPL, causing loss to the nation in billions of rupees. Chairman, Public Accounts Committee, Islamabad, Registrar, Supreme Court of Pakistan, Islamabad, with the request that the Supreme Court HR Cell take up suo motu notice, as this case may prove to be the tips of the iceberg of corruption in gas sector, which is also causing CNG shortage due to the corruption of mismanagement, Chairman, NAB, Islamabad, Secretary, Ministry of Petroleum and Natural Resources, Islamabad, Auditor General, Islamabad, Chairman SECP, Islamabad, MD, SNGPL, Lahore, Mian Misbah-ur-Rehman, Chairman, SNGPL, Lahore, and Directors SNGPL, Mirza Mahmood Ahmad, Nessar Ahmed, Shabbir Ahmed, Dr Shahab Alam, Ahmad Aqeel, A. Samad Dawood, Muhammad Arif Habib, Muhammad Azam Khan, Wazir Ali Khoja, Mian Raza Mansha, Azim Iqbal Siddiqui, and Shahid Aziz Siddiqui.