PSO spot purchases prices of LNG much higher than PLL

Islamabad – The Liquefied Natural Gas (LNG) cargoes procured by Pakistan State Oil (PSO) during 2021 under spot purchases were more expensive than the purchases of Pakistan LNG limited(PLL) during the year.
The high price of spot purchases by PSO is being attributed to mismanagement that had caused delay in tendering process by the company, official source told The Nation .Both PSO and PLL are state owned entities but the prices of spot purchases of previous is comparatively higher than the later.
In total in 2021, (from Jan to August) PSO had purchased three LNG cargoes from spot market and made expensive purchases as compare to PLL.
For the month of May 2021, PSO had purchased one cargo from spot market and the price of LNG purchase was $9.3494 per MMBtu, while the average price of four PLL spot cargoes was $7.03 per MMBtu. The prices of PLL cargoes were $7.6945 per MMBtu, $6.70 per MMBtu, $6.825 per MMBtu and $6.9250 per MMBtu for the month of May. An average the price of PSO spot purchases was around $2.30 per MMBtu higher than PLL for the month.
For July 2021, the spot purchase rate of PSO was $12.6789 per MMBtu, while of the PLL four spot purchased cargoes average was $11.6009 per MMBtu. For July also the spot rate of PSO was around $2 per MMBtu higher than PLL for the same month.
For August the spot purchase price of PSO LNG cargo was 22.13 percent of Brent or $15.9272 per MMBtu. For August the average rate of spot purchases of PLL was $10.3161 per MMbtu which around $5.60 per MMBtu cheaper than PSO purchases.
It is worth to mention here that for the months of January, February, March, April and June PSO didn’t make any spot purchase of LNG. Although the rates for September 2021, spot cargoes of PSO has yet to get the approval of the board of the company but the bids received by PSO was far higher than the PLL spot purchases for September.
When contacted regarding the reason for the high spot prices for the purchase of LNG during 2021 as compared to PLL, PSO responded in written reply that PLL has exemptions available from Public Procurement Regulatory Authority (PPRA) through which they award cargoes with shorter response times and single-day bid validity, whereas PSO does not have such exemptions available. 
It further said that “PSO’s tenders have longer response times and due to the requirement of holding the bids valid for a longer period of time i.e. 10 days (owing to unavailability of exemption from PPRA), suppliers build the cost of risk (in a highly volatile market being experienced during this year) in their quoted prices, thus higher prices have been experienced in PSO tenders, although in July, one cargo of PLL was more expensive than PSO’s only cargo awarded”.

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