Pakistan State Oil (PSO) has decided to re-tender base oil import SN 150 and SN 500 after finding discrepancies in award of contract.

Business Recorder, in its issue of November 16, 2011, ran a story: "PSO begins probe in $ 3 million loss scandal". Minister for Petroleum and Natural Resources, Dr Asim Hussain, directed PSO Chairman to investigate the scandal and take stern action against the culprits.

"No commercial transaction has materialised in regard to the base oil tender under question. The awarded contract was not performed during the allocated period and PSO in due course will be carrying out a re-tendering process for the requisite quantity of base oil," said PSO, in a letter to this scribe.

PSO has taken almost one month to probe the "suspected deal" from all aspects and also transferred many of those officials involved in the transaction.

PSO - the largest energy company - has completed its review into the allegations levelled by H&H Trading in the case of the recent base oil tender. The entire base oil tender process was evaluated by the company's "complaint committee" which comprised senior company officials from various departments. The committee's mandate was to assess the tender bidding process and to present its findings to the company's management in its report.

The committee found that the main claim made by H&H namely its assertion of being the lowest bidder for Group II Base Oil was incorrect as per the tender opening records. The committee also found that while the tender stated Group II bases oils, the nomenclature used was SN 150 and SN 500 instead of the correct suffix 150N and 500N. However, this discrepancy did not have any impact on the bidding process. During the review, it was also noted that H&H was the only bidder to have bid for both Group I and Group II oils. All other bidders were clear on the company requirements and had bid only for Group II oils.

During the review process the committee also found that H&H had listed the source of its offered product as "Russia and the CIS countries" in the initial tender inquiry, and had later claimed the name of the manufacturer as GS Caltex and Korea as the source of origin.

The committee also examined the decision to use Formosa manufactured base oil and noted in its report that Formosa and Exxon (Jurong) were the two brands recommended to the company by the lubricant additives manufacturer "Lubrizol." Formosa is one of the world's leading manufacturers of Group II base oils and their products enable PSO to produce high quality lubricants which are acknowledged as being some of the best in the market.  In light of the suggestions of the "complaint committee" the management has directed the concerned departments to make the tender documents more comprehensive to avoid any confusion in future.

The company assures its stakeholders that PSO being the nation's leading public sector organisation has always ensured transparency and impartiality in all aspects of its business operations and continues to further enhance its business practices in order to fuel the national economy in a responsible manner.