Pakistan GasPort suffers $114.5 million in losses
PHOTO: FILE
Pakistan GasPort Consortium Limited (PGPC), a liquefied natural gas (LNG) terminal operator, has claimed to have suffered losses of $114.49 million owing to state-run Pakistan LNG Limited (PLL)’s failure to utilise excess capacity of the terminal.
PGPC runs the second LNG terminal in Karachi which has total handling capacity of 750 million cubic feet per day (mmcfd). PLL has been allocated a capacity of 600 mmcfd. PGPC wants to utilise the excess LNG handling capacity of the terminal but no agreement has so far been reached with PLL. In addition, PLL has been using less than 50% of the allocated capacity.
Now, PGPC has approached the caretaker government, requesting it to help resolve all pending issues.
In a presentation to the caretaker energy minister, PGPC officials said that after the London Court of International Arbitration (LCIA)’s ruling of April 26, 2023, which declared the termination notice “void and illegal”, three disputes were still pending between the relevant parties.
One of these is related to third-party access to the terminal’s excess capacity. Company management said that under Clause 9.4 of the Operation and Services Agreement (OSA), PGPC had the right to use its excess capacity for third parties and PLL had to allow PGPC to utilise the excess capacity by executing third-party access agreements for joint storage and re-gasification of LNG.
PGPC claimed losses of $114.49 million up to August 2023 from PLL, caused by non-utilisation of the excess capacity. According to them, PGPC and PLL had made an arrangement for the utilisation of excess capacity, which was also approved by the PLL board, but it was not being implemented by PLL.
Another dispute pertained to the reimbursement of Port Qasim Authority (PQA)’s royalty. Under the OSA, PLL had to reimburse the royalty being paid to PQA on LNG imports. PGPC claimed receivables of Rs5.59 billion till July 31, 2023.
PGPC also sought recovery of $2.2 million from PLL for the services provided to the latter, in addition to the commissioning of cargo.
“We understand that payment for the same has been received by PLL from its customers under the Ogra-approved tariff,” PGPC said.
In an attempt to resolve the disputes, PGPC, through its authorised representative, proposed a 30% discount on all claims. However, the PLL board rejected the proposal.
No substantial discussions took place between the two sides. The initial timeline expired on August 3, 2023, which was extended twice at the request of PLL. The last extension expired on September 17, 2023.
“PGPC is willing to resolve the disputes, if a serious counter-offer is received from PLL,” the PGPC management said in the presentation.
Alternatively, it said, if the dispute could not be resolved, matters would be referred to LCIA where both parties should agree on expedited hearings.
PGPC asked the caretaker government to ensure immediate implementation of the excess capacity agreement or refer the matter to LCIA for swift hearing.
Published in The Express Tribune, September 27th, 2023.
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