Private sector irked as govt appropriates LNG import projects

Experts say govt’s policies will sink LNG import plans.

KARACHI: The private sector begrudges the preferential treatment state-owned enterprises sometimes receive from the government. No wonder, then, that the government’s desire to have the requisite infrastructure for the import of liquefied natural gas (LNG) developed under the public sector has created resentment among private companies that intend to take part in the upcoming integrated and fast-track LNG import projects.

“Instead of focusing on importing up to 250 million standard cubic feet per day (mmscfd) equivalent of liquefied petroleum gas (LPG) to cater to the expected switch from CNG to LPG, Sui Southern Gas Company Limited LPG (SSGC-LPG) has solicited proposals to ‘retrofit’ its newly acquired LPG terminal to make it suitable for LNG reception, storage and re-gasification,” said an energy expert working in the LNG sector, while speaking to The Express Tribune.

SSGC-LPG – a fully-owned subsidiary of Sui Southern Gas Company – invited proposals in February for the retrofitting of its LPG terminal on Port Qasim so that it can handle LNG imports.

Requesting anonymity, the expert criticised the expansion in the scope of services required in the Request for Proposals (RFP) for the SSGC LPG Retrofit Project, which, he says, goes beyond the span of the Expression of Interest issued early in 2012.

“Limiting the RFP to three bidders will ensure that the process is once again derailed and the efforts of the Ministry of Petroleum and Natural Resources become mired in controversy,” he added.

According to the RFP issued last week, the scope of services sought from bidders goes beyond the mere retrofitting of the existing LPG terminal to simultaneously handle LPG and LNG imports, as stated in the EOI advertisement. It now includes the design of suitable facilities, development of facilities, and operation of facilities in a joint venture with SSGC-LPG for a minimum period of three years after commissioning.

“It is of concern that a subsidiary of SSGC/Sui Northern Gas Pipelines may be used as a vehicle for LNG terminal development, against the decision of the Economic Coordination Committee (ECC) taken on October 4 which approved two integrated terminals of 400 mmscfd and one fast-track project using the existing infrastructure on Port Qasim,” he said.

Speaking to The Express Tribune, another player with potential stakes in LNG import in Pakistan said that international bids should be floated, as the RFP is currently restricted to only three bidders who responded to February’s EOI advertisement.

“The government should instead consider the Gwadar port for the development of an LNG land terminal in the public sector, with a later possibility of export facility for gas imported from Iran and from the Turkmenistan-Afghanistan-Pakistan-India Pipeline project,” he said while requesting anonymity.

The import of LNG was also on the agenda during President Asif Ali Zardari’s recent visit to Qatar. However, it remains unclear for which project the government intends to import LNG from Qatar. “International bidders are becoming increasingly sceptical because of conflicting policies of the government. The process of the LNG import should be transparent,” he said.

Published in The Express Tribune, November 10^th, 2012.