Engro ready to receive first shipment of LNG

FSRU to reach Karachi in second week of ongoing month.

KARACHI: Engro Elengy – the company that won the contract to handle liquefied natural gas (LNG) and has built a jetty at Port Qasim for the purpose – will be ready to receive shipments from March 10, the company’s chief executive officer Shiekh Imranul Haque said.

“The Floating Storage and Re-gasification Unit (FSRU) leased by the company to convert super-chilled liquid methane into gas will leave Dubai on March 7 and reach Karachi in three days,” he said.

“We are ready,” he said, speaking to journalists during a visit to FSRU at Dubai’s dry docks. “Now, it’s up to the government to let us know if they are ready to begin import.”

LNG will be arranged by the government, which initially aims to import 200 million cubic feet per day (mmfcd) to meet the rising demand from the power sector.

But Islamabad is yet to announce a firm agreement with any LNG supplier. Reportedly, talks are in advance stages with Qatar to secure long-term supply.

Mode of payment to suppliers also remains unclear. While government has said that Pakistan State Oil (PSO) will be used to open letter of credits, company itself has been tightlipped about it.

Just last month, Elengy, a subsidiary of Engro Corporation, succeeded in receiving $30 million for the project, which has a total cost of $133.3 million. It was a major breakthrough as Engro financed construction of jetty, a 24-kilometre long pipeline and lease of FSRU on its own. Besides the Asian Development Bank loan, International Finance Corporation (IFC) and local banks will provide $20 million and $50 million, respectively.

The remaining $33.3 million has come in as equity investment.

“This is basically bridge financing,” a person close to the development said. “It’s a retrospective loan to help the project take off.”

Even though the state-controlled Sui Southern Gas Company (SSGC) has guaranteed that it would receive gas imported by the government, banks were hesitant to finance the project.

Haque said Engro has fulfilled its commitment by constructing all facilities in record 300 days.

Published in The Express Tribune, March 4^th, 2015.

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