ISLAMABAD: Boards of directors of Government Holdings Private Limited (GHPL) and Pakistan LNG Terminals Limited (PLTL) have blocked a plan of the chief of Pakistan LNG Limited (PLL) to merge the two state-run liquefied natural gas (LNG) companies.
PLL Chief Executive Officer Adnan Gilani had lobbied the previous Pakistan Muslim League-Nawaz (PML-N) government for amalgamating the two LNG companies that dealt with gas imports and terminals. At present, he is also holding the acting charge of PLTL.
The move was supposed to bring multibillion-dollar LNG terminal and supply deals under the control of a favoured official of the government.
PLL and PLTL, which are subsidiaries of GHPL, were established during the PML-N government’s tenure to handle LNG import and terminal matters.
Sources told The Express Tribune that the merger proposal came up for discussion in meetings of PLTL and GHPL boards of directors.
The PLTL board refused to give the go-ahead and sought justification from the PLL chief why he wanted to merge the two companies.
Similarly, the GHPL board also voiced serious reservations and asked the PLL CEO for legal grounds to amalgamate the two companies.
The two boards noted that earlier two separate companies were set up and now a new idea had been floated for merging the companies to allow the PLL chief to take control in his hands. After the merger, state-run Pakistan State Oil (PSO) may be asked to hand over the import of 600 million cubic feet of LNG per day (mmcfd) from Qatar and through Gunvor commodity trading company to the merged enterprise.
However, PSO has been heavily dependent on LNG business for the past few years as its share in oil marketing has dropped sharply.
“It will be a major setback for PSO if it loses its LNG business as main focus of the company’s new management has been on LNG trade,” an official said.
Earlier, Gilani’s appointment as PLL CEO was rejected when Nawaz Sharif was the country’s prime minister.
Gilani had worked in the Prime Minister’s Inspection Commission and later Sharif’s secretary wrote a strong-worded note, saying Gilani was not capable of becoming CEO of the LNG company due to a lack of experience.
However, he was appointed chief operating officer of the company. Later, when Shahid Khaqan Abbasi took over as prime minister following disqualification of Sharif by the Supreme Court in July last year, Gilani was elevated to the slot of CEO.
After termination of services of Azam Sufi as CEO of PLTL, the company’s acting charge was also given to Gilani. Now, the National Accountability Bureau (NAB) is investigating his questionable appointment.
PLL has secured supply of 200 mmcfd of LNG through short and long-term contracts and remaining 400 mmcfd is yet to be booked.
Pakistan received higher bids for the spot purchase of 400 mmcfd of LNG and the government has now decided to ink deals with some energy-rich countries on a government-to-government basis.
Negotiations are being held with Azerbaijan, Russia, Malaysia and Oman for LNG supply. At present, Pakistan has a long-term state-to-state deal with Qatar at 13.37% of Brent crude price. It has also inked a deal with Gunvor at the same rate.
Afterwards, PLL struck an LNG supply contract with Italy’s Eni and Gunvor at a lower and attractive rate of 11.64% of Brent crude price by inviting tenders.
Published in The Express Tribune, June 15th, 2018.