ECC forms price committee for LNG imports

Decides petroleum secretary will head the negotiating committee

ISLAMABAD: The Economic Coordination Committee (ECC) has constituted a price negotiating committee for billions of dollars worth of liquefied natural gas (LNG) import projects, with the petroleum secretary to head the body.

The ECC, however, ignored a proposal of the Ministry of Petroleum and Natural Resources that had recommended Board of Investment (BOI) Chairman Miftah Ismail for the slot of committee chief.



In a meeting held on October 31, the ECC decided that the petroleum secretary would be the chairman of the price negotiating committee and the BOI chairman may be associated with the process as and when needed.

Minister for Planning, Development and Reform Ahsan Iqbal suggested that since the Ministry of Water and Power was a major stakeholder in the process, Water and Power Secretary Younus Dagha should be nominated as a member of the committee.

Earlier, the petroleum ministry had also proposed that a committee should be formed for negotiating prices with Russia for the $2-billion North-South LNG pipeline under the chairmanship of BOI chief.

This time too, the ECC in its meeting on April 11, 2016 turned down the proposal and appointed the petroleum secretary as the body chairman for being the principal accounting officer.

During the October 31 huddle, the ECC was informed that state-owned Pakistan LNG Limited had been tasked with securing multibillion-dollar LNG supply contracts through open competitive biddings as well as through government-to-government negotiations.



Under the state-to-state arrangement, Pakistan LNG was engaged in talks with Petronas of Malaysia and Gazprom of Russia in an effort to strike LNG supply deals.

Apart from these, the company was also holding negotiations with Engie of France, Eni (Italy), OTI (Oman) and Socar (Azerbaijan). A draft inter-governmental agreement will be implemented with these countries after completing all the required formalities.



Since LNG import was a capital-intensive project of national importance and in line with the committee set up for discussing LNG supplies with Qatar, the petroleum ministry was eager to constitute a similar committee to negotiate prices and other aspects with Petronas and Gazprom.

The first LNG terminal started functioning in Pakistan on March 27, 2015. PSO has managed to bring LNG cargoes through competitive biddings as well as via government-to-government arrangements from Qatar.

Over 43 cargoes have been handled at the terminal so far and 400 million cubic feet of re-gasified LNG per day (mmcfd) is being injected into the national grid.

Pakistan is facing shortage of natural gas both for electricity generation and for consumption by all other sectors including domestic consumers. Punjab, in particular, is feeling the pinch where residential consumers will endure suspension of gas supplies at night for the first time this winter.

Domestic gas production stands at nearly 4 billion cubic feet per day (bcfd), way short of the consumer demand, which is estimated at 6 bcfd and is continuously rising.

The energy shortage is not only causing hardships for the people but is also restricting the growth of national economy. Keeping all this in view, the government is pressing ahead with LNG imports to bridge the shortfall.

Published in The Express Tribune, November 8^th, 2016.

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