Construction: ECC gives go-ahead to second LNG terminal

Will be commissioned by mid-2017, will provide 600mmcfd additional capacity

ISLAMABAD: The country’s top economic decision-making body has approved the bid for the construction of Pakistan’s second LNG terminal.

The Economic Coordination Committee (ECC) of the Federal Cabinet has given its approval to government-owned Pakistan LNG Terminals Limited (PLTL) to direct the successful bidder to proceed with the construction of the terminal.

“The ECC approved the summary for the project on Tuesday,” Shahid Khaqan Abbasi, federal minister for petroleum and natural resources, told The Express Tribune.

The ECC has directed the Oil and Gas Regulatory Authority (Ogra) to notify the tariff offered by the successful bidder - PGP Consortium Limited - comprising Fauji Oil Terminal and Distribution Company Limited (FOTCO) and Pakistan GasPort Limited (PGPL).

The ECC approval follows a meeting of the PLTL board of directors held in Islamabad on Monday during which the members, again, endorsed the award of the contract. The PLTL board had previously approved the contract signing in its 12th meeting held on June 7, 2016.

Pakistan’s first LNG terminal was commissioned in March 2015 and provides 400mmcfd tolling capacity to Sui Southern Gas Company Limited (SSGC) at a levelised tariff of $0.6601 per mmbtu. The second terminal, which will be commissioned by mid-2017, will provide 600mmcfd of tolling capacity to PLTL at a levelised tariff of $0.4177 per mmbtu, which, according to ministry officials, is the lowest in South Asia.

The entire regasification capacity of the second terminal is earmarked for the three RLNG-based power plants being established in Punjab, each with a capacity of 1,200 megawatts. These plants are scheduled for completion in mid-2017.

Government officials and independent experts say that LNG is the only immediate and cost-effective solution to eradicate natural gas shortage which was impeding economic growth. According to ministry estimates, Pakistan is currently saving $1.5 billion per year through fuel substitution and greater efficiencies from LNG. The country’s current natural gas deficit stands at 2,000mmcfd. With the completion of the second terminal, this deficit will be reduced by half.

Other terminals

The ministry is also developing at least three other LNG terminals with the intention that these would become operational by the end of 2017, ahead of the next general elections. These projects include the LNG terminal being developed at Gwadar under the China-Pakistan Economic Corridor (CPEC) program, and another terminal being developed through government-to-government arrangements with Dubai-owned ENOC.

All terminals in the country will be handled by PLTL whereas all supplies for these terminals will be managed by Pakistan LNG Limited (PLL), which was also quite recently incorporated. Both PLTL and PLL are wholly owned subsidiaries of Government Holdings (Private) Limited.

Published in The Express Tribune, June 30^th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.