PLL ‘caused loss of Rs25b’ in LNG imports

State-run entity imported commodity at record high price, PAC told

Zafar Bhutta August 26, 2021
A briefing on the spot purchase of LNG by PLL and Pakistan State Oil will be given for the months of July and August. PHOTO: FILE


The government has suffered a loss of over Rs25 billion because of the sate-run Pakistan LNG Limited’s (PLL) failure in making timely arrangement for the import of the commodity, the Public Accounts Committee (PAC) was informed on Wednesday.

During the last few months, the PLL had cancelled cargoes and then awarded them to LNG traders after a few days at higher rates.

The PAC meeting, held under the chairmanship of Rana Tanveer Hussain at the Parliament House, was further told that the PLL had failed to arrange LNG imports when prices were lower in the market.

However, it imported the commodity at a record high price putting a multimillion-dollar burden on consumers.

The PLL also allegedly awarded several LNG contracts to one foreign firm, resulting in a controversy. Now, the National Accountability Bureau (NAB) is investigating the matter.

The PAC was further informed that there was an agreement with fertiliser plants to supply gas at lower rates. However, the fertiliser plants were not passing on its benefits to consumers.

Petroleum Secretary Dr Arshad Mahmood informed the panel that under the new agreement, Pakistan would import LNG from Qatar from November and December.

READ Senate panel to discuss LNG issues

“The gas can be stored for 20 days,” he said, adding that the main reason for purchasing expensive LNG was the lack of storage capacity in the country.

The secretary further said that Pakistan needed 12 LNG cargoes on a monthly basis.

“The cost of an LNG cargo ranges from Rs5 billion to Rs7 billion.”

During a meeting of the Senate Standing Committee on Petroleum chaired by Senator Mirza Abdul Qadir, Oil and Gas Regulatory Authority (Ogra) Chairman Masroor Khan said state-run gas companies were arguing that their clients would shift to other parties if the private sector was allowed to import LNG.

However, he added that the companies’ issues had been resolved now and the private sector would start importing LNG in the next two months.

The Petroleum Division told the Senate committee that the gas sector faced a loss of Rs35 billion in winter.

It added that the PLL was also facing financial difficulties.
The petroleum secretary said a forum should be formed with the authority to approve an annual delivery plan for LNG.

The Senate panel was informed that Qatar's long-term agreement was about $10 per mmbtu.

The Pakistan GasPort Consortium Limited (PGPC) terminal has been operating at low capacity due to some reasons. The daily rent of LNG terminal is $242,000.

The LNG terminal wants to sell LNG directly to consumers, while gas companies are of the view that if large sectors withdraw from the use of imported RLNG, their system will not work.

A feasibility study is under way to build LNG storages in Sindh at a cost of around $1 billion. The petroleum secretary said the loss of gas in winter is worth Rs35 billion. The Public Procurement Regulatory Authority (PPRA) has been told that its law did not suit LNG.

With regard to LNG purchase, PPRA has given exemption in the rules. The chairman of the committee said the federal government should look into the LNG market in advance.

The Sui Northern Gas Pipelines Limited senior general manager replied that LNG orders were timely.
However, the system was affected by the ups and downs in the orders of various companies.

The Ogra chairman said Hascol Petroleum Limited had important strategic storages but the Securities and Exchange Commission of Pakistan (SECP) and the State bank had not been contacted regarding the company’s “financial irregularities”.


Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ


Most Read