SSGC refuses to allow Engro to utilise excess capacity

Company board not willing to take risk of NAB investigation

ISLAMABAD:

The Sui Southern Gas Company (SSGC) board on Friday unanimously refused to allow Engro to retain a bigger Floating Storage and Regasification Unit (FSRU), Sequoia, at the first LNG handling terminal.

 FSRU Sequoia has a capacity of 900 mmcfd whereas the government has an allocation of 600 mmcfd. Now, Engro wants SSGC to either utilise its first right or allow it to utilise it for the private sector under third-party access rules.

In this regard, Engro Elengy Terminal Limited (EETL) CEO Yusuf Siddiqui had sent a letter to Energy Minister Hammad Azhar and petroleum secretary, saying that their ability to retain FSRU Sequoia after September 3, 2021 will diminish.

 However, in t h e emergency meeting, the SSGC board decided not to use its first right to utilise the bigger FSRU.

Sources say that the National Accountability Bureau (NAB) has been investigating the Engro LNG terminal contract.

 Therefore, the SSGC board is not ready to take risk. Furthermore, Engro had also called for including “take or pay” clause, which would bound SSGC to pay capacity charges in case the utility was unable to utilise the allocated capacity.

The Ministry of Energy had asked the SSGC managing director to take a decision on utilisation in a bid to avoid gas crisis in the coming years.

However, the SSGC board refused to allow the use of bigger FSRU. Engro had been building pressure on SSGC as well to seek permission for the use of bigger FSRU.

Earlier, SSGC had an agreement to utilise 400mmcfd capacity of the Engro LNG terminal. However, later, SSGC signed an agreement with Engro to get an additional 200 mmcfd and the matter landed in NAB.

Now, there has been another NAB probe for availing the bigger FSRU, SSGC officials say. The Ministry of Petroleum had written a letter to NAB, seeking clearance to avail the bigger FSRU of Engro. The SSGC management has been facing NAB cases and therefore they are not ready to strike any such deal that will land in NAB.

 At present, five former managing directors of SSGC are facing different NAB cases due to taking different decisions.

One of them is Engro LNG terminal contract case in which former prime minister Shahid Khaqan Abbasi is also facing charges of corruption.

The old FSRU Exquisite will return in the second week of September 2021 and will resume its operations under the existing structure of the LNG Service Agreement (LSA) after SSGC failed to find a solution.

Now, the country may face a gas crisis in the coming years as two new LNG terminals will be operational after 2024.