Pakistan's second LNG terminal contract to be awarded this month

With 600mmcfd capacity, it will supply gas to 3,600MW power plants

ISLAMABAD: The government will complete the process of awarding second LNG terminal contract to the successful bidder during the on-going month after the requisite go-ahead from the board of directors.

Talking to The Express Tribune, Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi said Pakistan LNG Terminals Limited’s (PLTL) board of directors was working on the second LNG terminal contract. “I hope the process of awarding contract to the successful bidder will be completed in May.”



The government is to award contract to the successful bidder in 10 days after board’s approval.

PLTL board of directors, in a meeting held on May 6, approved the financial bid submitted by Pakistan GasPort Limited (consortium), which emerged as the lowest bidder for setting up the country’s second LNG import terminal at Port Qasim in Karachi.

Pakistan LNG Terminals made the evaluation report public after a meeting of its board of directors. Bids were submitted by two parties, Pakistan GasPort Limited (consortium) and Akbar Associates (consortium), on February 26. The former qualified in the technical evaluation round, while the latter stood technically disqualified.

The next step would be to sign an LNG Services Agreement (LSA). This agreement would be negotiated with the successful bidder.

The National Accountability Bureau (NAB) and the Public Procurement Regulatory Authority (PPRA) have already given clearance to PLTL to award the contract in accordance with the law.

The Pakistan GasPort consortium includes Fauji Oil Terminal and Distribution Company (Fotco). The evaluation report states the consortium has offered a levelised (service) charge of $0.4177 per million British thermal units (mmbtu) for a capacity of 600 million cubic feet per day (mmcfd). The project has to be implemented in 11 months at Port Qasim.

Responding to a question about pipeline capacity, Abbasi said gas utilities, Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL), were already working to enhance the existing capacity by laying 42-inch pipelines to gradually increase the capacity to 1,200mmcfd.

Cost-saving evaluation

Abbasi said there would be price differential in electricity rate of 4 cents per unit through LNG-based power generation compared to oil-based generation.

“The second LNG terminal will have 600mmcfd re-gasification capacity which would be transported to three LNG-based power plants with total generation capacity of 3,600 megawatts,” he said, adding it would lead to the revival of economy which had suffered due to energy crisis.

“The country will make around $1.5 billion annual savings by using imported gas through the second LNG terminal,” he said, adding Pakistan would not only have clean energy but it would be cheaper.

However, Abbasi’s claims directly contradict the National Electric Power Regulatory Authority’s (Nepra) estimate that the electricity generated by gas was Rs0.73 per unit expensive than that generated via furnace oil (for the month of May).



Nepra elaborated that in one year (May 2015 - May 2016) gas prices had gone up 28% while oil prices slid by 47%. Since the imported gas prices are pegged with oil, it is unlikely that resurgence in oil price would present a cost-saving scenario either.

History

Pakistan’s first LNG terminal was set up by Engro in March 2015. Engro’s levelised (service) charge is $0.6601 per mmbtu for a capacity of 400mmcfd.

At present, it is receiving three ships every month from Qatar, averaging 300mmcfd, and one ship from Gunvor company, averaging 100mmcfd. Both sources are providing LNG at 13.37% of Brent crude price.

Published in The Express Tribune, May 13^th, 2016.

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