Procurement News Notice |
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| PNN | 7055 |
| Work Detail | Federal government is likely to allow Pakistan State Oil (PSO) to amend sale/ purchase agreement with Kuwait Petroleum Corporation (KPC) for supply of furnace oil and jet fuel, in addition to diesel oil, sources close to Secretary Petroleum told Business Recorder. The government will also allow KPC to set up an oil refinery project in coastal areas of Balochistan or any other part of the country, the sources added. Giving details, sources said, prior to year 2000, diesel oil used to be procured from Kuwait under a long-term contract between Government of Pakistan (GoP) and the Government of Kuwait through KPC, the state company of Kuwait, which lasted for more than two decades. The agreement continued to be renewed with mutual consent of both GoP and KPC. Later, an understanding was developed between GoP and KPC regarding provision of extended credit facility of 60 days, free of interest, by KPC to GoP, over and above the operational credit period of 30 days, for product cargo payments. Accordingly, in year 2000, on the directions of the Finance Division, an account was opened in the name of Director General Oil in the National Bank of Pakistan, Karachi wherein cargo payments were to be deposited on 30th day of B/L date for further transfer to KPC, Kuwait on 90th day from B/L date. In view of deregulation drive of the Government in 2001-02, the sources said, GoP assigned PSO to continue fuel supply contract with KPC and accordingly, in 2001, an agreement was executed between PSO and KPC for sale and purchase of Diesel Oil (HSD) only with a guarantee issued by GoP/Finance Division to KPC regarding PSO's payment obligations. A 90-day free of charge credit facility continued to remain effective as per prevailing mechanism on the basis of commitment, between Governments of Pakistan and Kuwait. The agreement between PSO and KPC is continuing for almost 15 years for supply of diesel oil along with credit facility for cargo payments being availed by GoP. Recently, KPC has shown an interest in supplying furnace oil and jet fuel also, in addition to diesel oil, under the existing contract, as well as setting up an oil refinery project with storage and receiving facilities in coastal area of Balochistan, the sources continued. Ministry of Petroleum & Natural Resources/PSO is considering the inclusion of furnace oil and jet fuel through an addendum to the existing product sale & purchase contract between KPC and PSO. The sources further stated that this is proposed to be done by invoking Rule-5 of the Public Procurement Regulatory Authority (PPRA) Rules 2004, which provides for a waiver of mandatory public procurement procedures, in case there exists an international or inter-governmental commitment of the Federal Government. The provision of Rule-5 is supplemented by the Public Procurement Regulation 2011, which states that whenever a sponsoring Ministry/ Division is of the view that prospective procurements are required to be made by invoking Rule-5 of Public Procurement Rules, 2004, it shall bring a case to the ECC after undertaking due consultations with the stakeholder Ministries/ Divisions/ Departments etc as prescribed in the Rules of Business, 1973. The ECC will consider such case(s) and authorise, or otherwise the sponsoring Ministry/Division whether or not to proceed in terms of rule-5 of the Public Procurement Rules, 2004. The case was taken up with PPRA as well as Law & Justice Division for legal advice as to whether Rule-5 of PPRA Rules, 2004 can be invoked under the existing long term contract between PSO and KPC. PPRA has cleared the proposal. Law Division has also stated that the contract between KPC and PSO flows from the agreement between GoP and KPC. The addendum to the contract adds new products. It will therefore be treated and read as an integral part of the existing contract. It is, thus, covered by Rule 5 of PPRA Rules, 2004 and the PPRA Regulation, 2011. Accordingly, the addendum has been vetted by Law Division from legal point of view and has been cleared subject to fulfilment of all codal formalities. Petroleum Ministry has proposed that PSO should be allowed to proceed with KPC for finalising/ signing the addendum to the existing product sale & purchase contract between KPC and PSO for supply of furnace oil and jet fuel, in addition to diesel oil, along with setting up of an oil refinery project in coastal area of Balochistan or other parts of Pakistan. |
| Country | Pakistan , Southern Asia |
| Industry | Oil & Gas |
| Entry Date | 15 Oct 2016 |
| Source | http://www.brecorder.com/fuel-a-energy/193/83124/ |
