Pakistan may lose a planned investment of $1 billion in the energy sector following threats from Global Energy of Turkey that it will drop plans to hold operations in the country because of an ‘unstable’ investment environment.
According to sources, Global Energy Chairman Ahmet, in a meeting held at the Ministry of Petroleum and Natural Resources, told the ministry officials that the company could not wait any more in Pakistan after spending millions of dollars on a liquefied natural gas (LNG) import project.
The LNG project, initiated by the Turkish firm, came to a halt after the government refused to provide three-month payment guarantees worth $700 million for LNG imports. In the first phase, the company had planned to invest $400 million, which would be later extended to $1 billion.
Talking to The Express Tribune, the Global Energy chairman confirmed that as a private investor, they could not stay any more in Pakistan due to the unstable investment environment in the energy sector. He said though the company had obtained an LNG terminal construction licence in November last year, no progress had been made so far.
“We feel that the environment is not favourable for investment in Pakistan, therefore, we cannot waste more time here,” he said, adding Pakistan was a friend of Turkey and the company came here to support the country’s efforts to overcome the energy crisis.
However, he said the government was not facilitating private investment and it seemed it did not want investment in the country. “Sometimes, we hear that the government wants to cancel the capacity allocated to the LNG project developers.”
Besides the planned investment of $1 billion by Global Energy, he said, US agency Overseas Private Investment Corporation (OPIC) had committed to provide $300 million for the LNG import project. If the government provided support, the first LNG consignment could reach Pakistan in 16 months, he pointed out.
Responding to a question, the Global Energy chairman denied that the company had sought sovereign guarantees from the government of Pakistan, but said it had demanded three-month payment guarantees to cover letters of credit opened for LNG imports, which is an international practice.
“We also want international competitive bidding for the LNG integrated import project if the government initiates it,” he said.
Global Energy is one of four companies which are working on the LNG import project to tackle the country’s energy crisis. In addition to this, the government is planning to initiate the LNG integrated project, which will bring 800 million cubic feet of gas per day (mmcfd).
Published in The Express Tribune, August 3rd, 2012.