The efforts put into constructing the second liquefied natural gas (LNG) terminal have come to naught as the winner of the tender, Akbar Associates, have filed a fake bank creditworthiness certificate. This firm forged a $400 million LNG terminal contract. While the company will be officially blacklisted, this is not a novel occurrence in the industry. Many companies like this one receive these similar contracts with fraudulent paperwork because they have political patronage. The rot seeps deeps into our economy, bureaucracy and media… wherever one scratches, greed and dishonesty crawl out.
Yet, this is just the tip of the iceberg. The LNG deal with Qatar deteriorates as we speak. The Minister for Petroleum Khaqan Abbasi has announced that the LNG deal with the Qatari government has not been finalised as WAPDA has not yet opened a letter of credit or established a payment mechanism. Whether this is because of negligence or because of efficiently, the whole situation is embarrassing and appalling. The government has been saying that 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, but this does not seem likely.
The complications do not end here. Various agencies and ministries are struggling to resolve a series of problems at the port, in the gas transmission system and on the legal front and Qatar Gas has declined to dispatch Q-Flex ship loaded with LNG for the time being. So PSO has had to ask Engro to send a vessel to Qatar, with much higher transportations costs. The cost of the gas that is already here from Qatar will not be transferred to domestic consumers, but would be borne by power plants, fertiliser manufacturers and Compressed Natural Gas (CNG) pumps. Thus CNG rates are expected to go up.
And trouble doesn’t end here either. The Oil and Gas Regulatory Authority (OGRA) is under judicial scrutiny and cannot regulate prices or send out price signals. As a result, the Sui Northern Gas Pipelines Limited (SNGPL), which was supposed to share in the cost of importation, will not be able to get LNG pricing to be able to pay for the cargo it is getting. Payments, pricing, transport is all in limbo, and there are yet more problems with LNG import that could be listed. With such terrible mismanagement, there should be no expectation that any relief will be offered to the consumer. Why the Petroleum Ministry did not see any of this coming is beyond anyone’s comprehension. We seem to have lost the plot on LNG and chances are that the whole system will be operating at a loss.