LNG deal with Qatar

$16 billion dollar LNG deal signed between Pakistan and Qatar is being hailed by analysts and industry representatives

The $16 billion dollar LNG deal signed between Pakistan and Qatar on February 10 is being hailed by analysts and industry representatives as a step in the right direction and perhaps rightly so. Most quarters have pointed towards the benefit of importing the fuel to bridge the widening demand-supply gap in the country, moving a step closer to addressing the power crisis. The deal will see Qatar export the fuel to Pakistan for 16 years to meet our domestic energy requirements. According to the agreement, LNG will be transported to Punjab where power plants are being set up. The aim is to generate more electricity and also to convert the fuel to provide it to CNG-based stations. On paper, everything seems to be working for the PML-N. Pakistan will buy LNG from Qatar at 13.37 per cent of Brent crude price, which amounts to $4.68 per million British thermal units when oil is sold at $35 a barrel. This also includes port charges of $320,000 a vessel. This is a much better deal than what was originally planned and government officials have not stopped talking about how they have saved millions.

But there are other issues that need to be sorted out. Sindh has expressed its displeasure at the LNG-based power plants being set up in Punjab and this is where it could all get ugly. We have already seen smaller provinces resenting projects that are based in the PML-N’s stronghold of Punjab, as they point towards the lack of development taking place elsewhere. With LNG being imported to meet domestic requirements, Sindh wants a piece of the action as well and the federal government should address its concerns. The fact is that LNG is cheap and could greatly improve the country’s energy mix, where a piling circular debt has had to be parked in a holding company to reduce the burden on the budget. For now, the PML-N will celebrate the deal and use it to garner more votes come the next election. However, it must not ignore that the use of imported LNG needs to go beyond Punjab. The concerns of the smaller provinces must be heeded.

Published in The Express Tribune, February 12^th, 2016.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.