New LNG project: Planning Commission fearful Dutch firm may sue Pakistan

LNG committee decides to establish company for building terminal.

ISLAMABAD:

The Planning Commission and Ministry of Finance have expressed fears that Dutch firm 4Gas, who won the Mashal LNG import project, may take Pakistan to the international court of arbitration should the government start new short and long-term LNG import ventures.

“We should keep in mind that 4Gas may sue Pakistan in the international court if a new LNG import project is undertaken,” cautioned Planning Commission Member Energy Shahid Sattar in a meeting of the Committee on LNG Infrastructure Projects, constituted by the prime minister, here on Friday.

The meeting was chaired by Adviser to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain, who stressed the need for enhancing gas supply to various sectors and pursuing LNG imports.

According to sources, Sattar pointed out that the government should take into account the possible litigation by ‘4Gas’ as the Mashal project had been stalled due to opposition from the Ministry of Law.

The Dutch firm has already written a letter to the Economic Coordination Committee (ECC) chairman, revealing its plan to go into litigation if the new project is started. The firm’s chief executive was of the view that the Mashal project was still valid and it should be renegotiated.

In the meeting, it was decided that a joint venture company of the Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) would be established with a mandate to build an LNG terminal. Income earned from the gas infrastructure development cess will be spent on setting up the venture.

“The terminal should be open for all who want to import LNG,” suggested Gohar Ejaz, a representative of the textile industry who is working with the government on LNG imports. “The government can charge a fee from interested parties,” he said.

According to a statement issued here, the committee members were briefed in the meeting on the LNG import project and previous decisions of the ECC in this regard. Detailed discussions were held on the framework for import of LNG including fast-track imports and a long-term import programme.

The committee members unanimously agreed that LNG import projects were necessary keeping in view the current energy crisis in the country.

The committee was of the view that the central government should have major shareholding in the joint venture company, which should undertake infrastructure development for LNG imports. It was also recommended that the import initiatives, already undertaken by the SSGC, should run parallel to the infrastructure development so that LNG could be imported as early as possible.

Members who attended the meeting included the water and power minister, secretary finance, secretary water and power, representatives of the Ministry of Law and Justice, Gohar Ejaz, Razak Dawood, APTMA Chairman Ahsan Bashir and senior officers of the Ministry of Petroleum and Natural Resources.

Published in The Express Tribune, August 18^th, 2012.