Contract for second LNG terminal to be awarded today

Will help provide fuel to power plants in Punjab.


Zafar Bhutta June 06, 2016
Several power plants, including Saif, Halmore and Orient, have not been operating due to lack of strategy regarding fuel supply. PHOTO: FILE

ISLAMABAD: The board of directors of Pakistan LNG Terminals Limited (PLTL) is set to meet on Tuesday (today) to award the contract for the second LNG terminal at Port Qasim, Karachi.

Following the approval, PLTL will sign a LNG services agreement with the successful bidder.

The board of directors of PLTL, in its meeting held on May 6, had approved the financial bid submitted by Fauji Oil Terminal and Distribution Company Limited (FOTCO) with Pakistan GasPort Limited (PGPL), which had emerged as the lowest evaluated bidder for the contract to set up the country’s second LNG import terminal at Port Qasim in Karachi.

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

The successful bidder had offered a service charge of $0.4177 per mmbtu for a capacity of 600mmcfd. The project has to be implemented in 11 months.

The second party, Akbar Associates, lost the bid and filed a case in court. However, an official of the petroleum ministry stated that PLTL had sought a legal opinion, which argued that the contract could be awarded to the successful bidder despite the ongoing court case. According to the legal opinion, the court had not barred the company from awarding the contract to the successful bidder.

“The case will be tabled before the board of directors of PLTL that would take its decision in awarding the contract,” official said, adding that the government was bound to award the contract to the successful bidder in 10 days after the board approves the financial bid.

The official said that setting up the LNG terminal was part of the government’s energy strategy to provide gas to LNG -based power plants with 3,600MW generation capacity in Punjab. He said that these plants were being set up at the load centre of Punjab, in a bid to help the province overcome its energy crisis.

The sister power plants, including Saif, Halmore and Orient, have not been operating due to lack of strategy regarding fuel supply. However, in the case of new power plants, the government had formulated a strategy to provide sustainable and credible fuel supply.

He said that three LNG power plants with 1,200MW generation capacity each were being set up. Petroleum Ministry had given the undertaking to the power ministry to provide 200mmcfd of LNG to each plant. “The second LNG terminal is being set up with 600 mmcfd LNG handling capacity to provide uninterrupted gas supply to these power plants,” official said.

“The new LNG based power plants have 62 per cent efficiency rate. If they are operated at an average capacity of 55%, they would generate over 4,000MW of electricity.”

The official further said that past governments had allowed Independent Power Producers (IPPs) to use diesel and furnace oil which led to higher electricity bills.

Pakistan's second LNG terminal to be built at Karachi's Port Qasim

“Furnace- or diesel-based power plants operate at a maximum 45% generation capacity which means that they do not only generate expensive power but they produce less clean energy,” official said, adding that the government of Pakistan had signed the Paris Climate deal and vowed to produce clean energy.

Additionally, the official said that there would be a price differential in electricity rate of 4 cents per unit through LNG-based power generation, helping the country save around $1.5 billion annually.

Published in The Express Tribune, June 7th, 2016.

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