Investment minister challenges EVTL lease extension decision

Federal Minister for Investment Qaiser Sheikh has strongly opposed the decision to grant a 30-year lease extension to Engro Vopak Terminal

Islamabad: Federal Minister for Investment Qaiser Sheikh has strongly opposed the decision to grant a 30-year lease extension to Engro Vopak Terminal Limited (EVTL), arguing that the move violates public procurement regulations and could negatively affect competition and growth in Pakistan’s petrochemical sector. His objections may lead to a reconsideration of the decision by the Economic Coordination Committee (ECC) and the federal cabinet.

In a letter addressed to ECC Chairman and Finance Minister Muhammad Aurangzeb, Sheikh expressed concern that his objections to the proposal were not reflected in the official minutes of the ECC meeting held on June 5. According to Sheikh, he formally protested the extension because it was approved without a competitive bidding process, which he believes is inconsistent with the Public Procurement Regulatory Authority (PPRA) Rules, 2004.

The federal cabinet reportedly referred the matter back to the ECC after the investment minister raised concerns. Sheikh confirmed that the issue was scheduled for further discussion during the committee’s meeting on Tuesday.

The current 30-year agreement between the Port Qasim Authority (PQA) and EVTL is set to expire this Thursday. The original Build-Operate-Transfer (BOT) agreement was signed in 1996. Despite the approaching expiry date, the ECC recently approved another 30-year extension for EVTL through an additional agenda item, prompting criticism from within government circles.

Sheikh argued that EVTL’s proposal does not qualify as a “unique and innovative” unsolicited proposal under PPRA regulations, particularly Rule 37-A. He maintained that granting a lease extension without open competition would create a monopoly and undermine efforts to promote investment and competition in the petrochemical industry.

According to the minister, both PPRA regulations and assessments conducted by PQA’s internal committee concluded that EVTL’s proposal failed to meet the criteria required for an unsolicited contract extension. He further stated that amendments made to certain clauses of the implementation agreements effectively bypassed the competitive bidding process and provided an unfair advantage to the existing concessionaire.

Government officials indicated that the ECC may review its earlier approval in light of these objections. The federal cabinet’s decision to send the matter back for reconsideration has increased the likelihood of further scrutiny.

EVTL plays a significant role in Pakistan’s import infrastructure, handling more than 60 percent of the country’s bulk chemical imports and around 55 percent of marine liquefied petroleum gas (LPG) imports. The terminal has also been credited with supporting downstream petrochemical investments and generating substantial savings for the national economy.

Records presented to the ECC showed that the original agreement required negotiations for any extension to begin ten years before the expiration of the first 30-year term. While negotiations were initiated, they failed to produce an agreement. In 2021, the PQA Board concluded that talks had ended without success and directed authorities to begin a competitive procurement process through the appointment of a consultant.

In 2022, EVTL submitted an unsolicited proposal seeking an extension. However, a PQA committee determined that the proposal lacked the uniqueness and innovation necessary to qualify under PPRA rules. Despite this assessment, the government later reopened negotiations while simultaneously continuing preparations for a bidding process. Eventually, both sides agreed on terms for a further 30-year extension, which received approval from the PQA Board and was subsequently endorsed by the ECC.

The investment minister has now reiterated his opposition, keeping the future of the extension under review.