Kabir defends decision to purchase LPG from Shell International

By Chathuri Dissanayake

Public Enterprise Development Minister Kabir Hashim yesterday sought to defend his ministry’s recommendation to purchase 300,000 metric tons (MT) of pressurised Liquid Petroleum Gas (LPG) from Shell International Eastern Trading Company, insisting that a proper procurement process was followed. 

A visibly-irate Minister Hashim yesterday sought to dismiss allegations against him for influencing the Technical Evaluation Committee (TEC) to favour Shell International in purchasing LPG for State-run Litro Gas. 

Four companies, including Shell International which secured the tender last year as well, bid this year to win the supply contract. Both Oman Trading Industries (OTI) and Shell International have quoted the lowest prices for transport. However, OTI was deemed unsuitable by the TEC, which recommended awarding the contract to Shell. 

“The decision was not mine. The TEC recommended awarding the contract to Shell International, taking into consideration its technical capabilities,” the Minister told reporters at a press conference. 

“The TEC and the Standard Cabinet Appointed Procurement Committee (SCAPC), which evaluated the tender, is independent of the ministry. I am not the one who appointed TEC,” the Minister claimed. On being told that the Litro Gas Board meeting minutes also referred to the TEC as being appointed by the Minister, Hashim insisted that the Board may have made a genuine mistake. 

Defending the decision to award the tender to Shell International instead of OTI, he stressed that OTI was a company which had been blacklisted before 2017 due to its failure to comply with the agreed terms. The company was subsequently removed from the list after the Omani Government wrote to the ministry to inform it of reforms in the company, giving full ownership to the State. 

According to the Minister, OTI through their Minster has informed the Ministry of Public Enterprise Development of its willingness to supply LPG at a transport cost of $ 65 per 1 MT. 

“The transport cost is the determining factor in purchasing LPG, as the standard is to quote Saudi Aramco CP plus the transport price, but we were buying from Shell at $ 58, so we informed them to bid during the tender process,” Hashim explained. 

The exchange between the two countries to negotiate a deal led to the delay in calling for tenders for LNG supply for 2018 which required two spot tenders to be called for LNG supply for two months. 

OTI then bid $ 48 per MT of LPG and it was the lowest price. However, it was disqualified from bidding by the TEC. Negotiations with Shell International secured a price of $ 47.50 per MT of LPG, the Minister said. 

“I cannot enter into an agreement, even when it is a government-to-government one, when the terms are not favourable for the country. Am I wrong to ensure that my country’s interests are looked after?” he asked. 

The Minister pointed out that OTI could have appealed against the tender board’s decision with the Precedential Appeals Board but failed to do so, which led the ministry to believe there was no objection with awarding the contract to Shell International.

When quizzed by journalists, the Minister was not able to explain why the shortcomings of Shell International were not considered by the TEC when the same criteria was used to disqualify OTI.

“I am not able to answer such questions as I am not privy to the information. It is unfair to demand explanations from me,” he said. 

The Minister insisted that the Government was able to make a saving on the spot tenders as they were able to negotiate a lower price on both accounts. 

“We negotiated a price for $ 57 for the first tender, when the agreement we had with the same company was priced at $ 58 and we managed to reduce the cost to $ 47 after we were aware of the prices tendered,” he said.