As it slowly becomes apparent that the government will not be able to import liquefied natural gas (LNG) any time soon, it has left the private company that built the multi-million dollar terminal in disarray.
Engro Elengy Terminal Limited (EETL), a subsidiary of Engro Corporation, has invested over $133.3 million to build a jetty, pipeline among other facilities to handle LNG import after winning a government contract.
The project also involves a Floating Storage and Re-gasification Unit (FSRU), which is in essence a large ship with onboard storage tanks and a plant to convert super-chilled liquid methane into gas.
This unit, which EETL has hired from an American company, was supposed to berth at its Port Qasim jetty on March 10 (Tuesday).
“No one knows when the first LNG cargo is going to come. So what is the point of bringing the ship here? It would be an embarrassment for everyone,” said an official close to the development.
A delay in bringing LNG beyond March 31 would mean Sui Southern Gas Company (SSGC) has to pay $272,000 every day to EETL as capacity payment. Import gas will go into the pipeline system of SSGC to be distributed to various customers.
Officials in the Ministry of Petroleum and Natural Resources including Petroleum Minister Shahid Khaqan Abbasi have been given statements for months on how close the government is in signing a contract with its Qatari counterpart to import LNG.
Yet nothing has been announced so far.
Multiple reasons are behind the delay but most important remains the government’s desire to save its face.
“All along, we have been hearing that power companies will use LNG and also arrange the money for its import. But that hasn’t happened either,” said another official.
Even if Pakistan stands ready to book a consignment today, it might take weeks before it can actually import it.
“Officials haven’t finalised a lot of little things like the surveyor who will check quality and quantity of LNG. What about wharfage, insurance, L/C charge and other incidentals. How would they fit in the price structure?”
All these things involve lengthy paperwork, overlapping jurisdiction of various departments and approvals of regulatory authorities.
LNG will be arranged by the government, which initially aims to import 200 million cubic feet per day (MMCFD) to meet rising demand from power sector.
Mode of payment to suppliers also remains unclear. While the government says that Pakistan State Oil (PSO) will be used to open letter of credits, the company itself has been tightlipped over the issue.
Government intends to import 3 million tons of LNG a year initially.
According to estimates, demand for gas outstrips supply by 2 billion cubic feet (Bcf) per day often leaving factories, power plants and vehicles without fuel.
Published in The Express Tribune, March 11th, 2015.
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