The Supreme Court on Wednesday declared Liquefied Petroleum Gas (LPG) quota agreement, which was executed between Sui Southern Gas Pipeline Limited (SSGCL) and Jamshoro Joint Venture Limited (JJVL) during 2003, illegal. Pakistan Muslim League-Nawaz (PML-N) leader Khawaja Asif had filed a petition against the LPG quota award while he was a member of the Opposition in the Lower House.
He urged the court to declare the LPG quota agreement illegal on various grounds, including non-transparency in bidding process. Announcing its 23-page verdict, a three-judge bench led by Chief Justice Iftikhar Muhammad Chaudhry ruled that “the Implementation Agreement (IA) as executed between SSGCL and JJVL cannot be allowed to continue being based on illegalities from its very inception and has accordingly been set aside with all consequential liabilities”.
The court constituted a two-member committee of M.H.Asif, former member Ogra and Shabbar Raza Zaidi, partner of M/s A.F.Ferguson and Co, Chartered Accountants, saying “the Committee has been constituted to inter alia calculate royalty payments (on the LPG extracted to date) on the basis of the Saudi Aramco reference price plus freight, for the full period during which the IA has been operational…to determine an acquisition price for the LPG extraction plant, and to suggest a management mechanism to the Court for appropriate orders including, if necessary, for the appointment of an independent manager/receiver. The court also held that the Committee will complete its task within 15 days of announcement of the judgement”.
The court also issued directives to Federal Investigation Agency (FIA) to probe the matter and submit a report within a month which would identify all those who were responsible for failings, including acts of criminal negligence, corruption, corrupt practices or other offences.
The verdict said that the FIA would also inquire into and investigate such other matters which may come to light from examination of any documents and records during the course of inquiry or investigation. The judgment, authored by Justice Jawwad S Khawaja, held that the IA of August 12, 2003 was awarded to JJVL in gross violation of the bidding process as advertised and as set out in the tender documents, including Instructions to bidders. The court ruled that the project was awarded by SSGCL in a highly non-transparent manner with the objective of giving undue benefit to JJVL. The court observed that the changes made in the IA with the objective of giving an unfair and an unlawful benefit to JJVL at the cost of the state, state enterprise SSGCL and ultimately, the people of Pakistan.
“The deletion of clause 18 of the IA and its substitution by a vague and meaningless clause was at the behest of JJVL and for the benefit of JJVL and its lenders at the expense of the general public interest,” the verdict said. It added that the basis for calculating royalty payments which had specifically been agreed was unlawfully altered to provide a benefit to JJVL and a heavy loss to SSGCL, the state and ultimately to the people of Pakistan. The verdict ruled that all losses caused to and incurred by the state, state enterprise SSGCL and the people arising out of and as a result of the bidding process and during the tenure of IA are to be made good and recovered from JJVL and all persons who had actively participated and had made substantial decisions in the bidding process and making of the IA.
The verdict also ruled that Pakistan has been blessed with a vast array of natural resources including mineral oil and natural gas and the people of Pakistan are the ultimate owners of such resources through their government and state enterprises such as Sui Southern Gas Co Ltd.
In this respect, “we are guided by the exhortation that the State shall ensure the elimination of all forms of exploitation …” (Article 3 of the Constitution) and Article 38 of the Constitution which commands that “the State shall … secure the well being of the people … by preventing the concentration of wealth and means of production and distribution in the hands of a few to the detriment of general interest,” the judgement ruled. The verdict observed that the circumstances brought on record showed gross criminal negligence on the part of functionaries of SSGCL, JJVL and possibly others, or the existence of corruption and/or corrupt practices in the bidding process, award of the LPG extraction project, overruns and delays in the implementation of the Project.
Author: Khudayar Mohla
Source: Business Recorder