Hurdles: WAPDA’s failure delays LNG deal with Qatar, says Abbasi

Minister points to WAPDA’s inability to open LC, establish payment mechanism.

ISLAMABAD: Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi on Monday said the liquefied natural gas (LNG) deal with the Qatari government has not been finalised because of failure of the Water and Power Development Authority (Wapda) to open a letter of credit (LC) and establish a payment mechanism.

Speaking at a meeting of the National Assembly Standing Committee on Ports and Shipping, Abbasi said the ministry’s responsibility was to negotiate rates and terms for LNG import and provide gas to Wapda for replacing furnace oil in power production.

“Wapda’s inability to provide the LC and absence of a payment mechanism have caused delay in finalising the deal with Qatar,” he said.

The minister said the imported LNG would be used as an alternative to furnace oil in power generation, which would result in savings of $1 billion annually. This difference will be shifted onto consumers as a relief.

He pointed out that no province, including Sindh, was self-sufficient in compressed natural gas (CNG) supply and every province was required to convert CNG filling stations into LNG. The government has already granted permission in this regard.



Abbasi added even Sindh had to switch to LNG for uninterrupted gas supply, stressing locally produced natural gas would be provided for residential consumers, power and fertiliser companies, but not for CNG stations.

“In Punjab, CNG has been completely stopped,” said Abbasi. “The LNG price has been set 30% lower than the petrol price.”

The minister said before signing the agreement with Qatar for LNG import, the ministry had also written letters to all political parties, seeking suggestions whether they had any other choice which was more viable than Qatar.

The step was taken in view of the criticism made by the political parties for choosing Doha as an LNG source.

“Qatar is the most viable option in the region because it is the cheapest,” Abbasi remarked. He said India, South Korea and Japan were already importing LNG from Qatar, but Pakistan was offered the lowest rate.

The minister, however, pointed out that there were capacity issues pertaining to LNG import through Port Qasim, saying that the port authority should address the issues and develop the capacity. “The Ministry of Petroleum is even ready to give funds for developing the capacity.”

Published in The Express Tribune, May 26^th, 2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.