Multi-billion dollar project: Controversial LNG deal scrapped by ECC

ECC orders retender of Liquefied Natural Gas import contract.

ISLAMABAD: Bringing an end to the ongoing controversy, the government on Tuesday decided to scrap the multi-billion-dollar Mashal Liquefied Natural Gas (LNG) import project and directed that the contract be retendered according to the law ministry's opinion.

The decision was taken at a meeting of the cabinet's Economic Coordination Committee (ECC), headed by Finance Minister Abdul Hafeez Shaikh.

Finance Secretary Dr Waqar Masood told reporters that the ECC has decided in principle to retender the project while Petroleum Minister Naveed Qamar said that the project will be retendered according to the ECC's decision.

In February 2009, the ECC, then headed by former finance minister Shaukat Tarin, had awarded the 3.5-million cubic feet per annum import of LNG contract to a French company called GDF-Suez. The total cost of the project over five years was estimated at $20 billion.

The LNG terminal handling project was awarded to Dutch company 4Gas. However, on the basis of alleged corruption in the deal, the Supreme Court directed the government to bundle the LNG import and terminal contracts and award them to a single party. This led to a tussle between the petroleum ministry, which wanted to award the bundled project to 4Gas again, and the law ministry, which demanded retendering of the contract.

However, according to an official handout released by the finance ministry: “On the summary moved by the Ministry of Petroleum and Natural Resources for the import of LNG, it was decided that the law ministry may be consulted and review it in detail“.

When asked to comment on the ministry's handout, a spokesperson of 4Gas said there was nothing to say on the basis of the press release.

The ECC also approved a summary of the Ministry of Petroleum and Natural Resources seeking allocation of gas at Wellhead from the Oil and Gas Development Company's dormant fields.

The summary had proposed that gas from Nur Bagla, Jakhro and Sara West fields may be allocated to the Government of Sindh or to its designated entity at Wellhead.

The summary was moved in light of the 18th amendment, after which the subjects of mineral and natural resources were devolved to provinces.

No decision on restoring gas supply to fertiliser sector Meanwhile, the ECC could not decide on restoring gas supply to the fertiliser sector for producing 250,000 tons of urea to meet the needs for Rabi crop.

The industries ministry sought immediate restoration of gas for 30 days to the fertiliser industry and a combination of proposals was presented before the committee.

During deliberation, committee members were told that 55,000 tons of urea is stocked with the Trading Corporation of Pakistan (TCP) but that stock was specified to be distrib uted among flood-hit people through provinces.

The matter was referred to a committee formed to monitor the import of 225,000 tons of urea. It has been assigned to review the quantity of urea available in the country and gas availability for fertiliser companies. The committee has also been assigned to acquire assurance from the Saudi Arabia Basic Industries Corporation (Sabic) for the delivery of 225,000 tons urea before February 15. Officials said the Sabic may be unable to deliver on time as the National Tariff Commission has already initiated anti-dumping investigation against the company on account of exporting 5,000 tons of caustic soda to Pakistan.

Shaikh told the Adviser to the prime minister on Agriculture Kamal Majeedullah to talk to the Government of Sindh about the 55,000 tons of urea presently stocked with the TCP.