ISLAMABAD - In an unprecedented move, federal cabinet on Friday approved the policy for the import of Liquefied Natural Gas (LNG) and construction of LNG terminal in Karachi.
After this decision Elengy Terminal Pakistan Limited (ETPL), a subsidiary of Engro Corporation Limited, will construct a terminal and undertake activities related to the project at Port Qasim. But some experts believe that the decision has been made in haste.
"This is for the first time I have heard that a company has been awarded contract by cabinet; whereas, the standard procedure for the approval of any new project is through the ECC (Economic Committee of the Cabinet)", a formal Petroleum secretary told the Nation. He was surprised that why government was so ambitious about this project that it even disregarded the standard operating procedures (SoPs).
It was learnt that not only government approved LNG terminal construction directly through cabinet but was also exerting tremendous pressure on Ogra and Port Qasim authorities to facilitate the sole bidder ETPL. “There has been a pressure on Ogra to grant licence that it accommodated and recently the chairman even suspended one officer who opposed to carry out illegal work,” sources said.
It was learnt that ETPL has not completed required certificates and studies and according to LNG policy, in absence of these preliminary requirements Ogra cannot issue LNG licence. Reportedly, Ogra, which held a public hearing at Port Qasim last month, accepted incomplete application of ETPL and processed it. Sources said that Ogra had written to ETPL last week to complete its remaining documents and submit a compliance report so the authority could give it a go ahead.
According to sources, no deal has been materialised between Qatar Gas Company and Pakistan, but government is in such a hurry to build the terminals at Karachi’s Port Qasim that it has directed ETPL to complete the terminal in 335 days; otherwise, they will have to pay 150,000 dollar per day as penalty. But it is learnt that imported gas will be hardly beneficial in meeting the prevailing gas deficit.
In peak days it would be only five percent of present gas deficit in first year; moreover, it would be costly from the gas being supplied presently. Under the LNG deal Pakistan will buy 200 million cubic feet of LNG per day (mmcfd), which will be re-gasified at the Port Qasim terminal and later injected into the system. According to project, after one year by 2015, the volume will be increased up to 400 mmcfd. According to petroleum ministry data, this LNG import would be only 5% of total deficit in peak demand time in the country and would be 10% after one year.
It was learnt that behind this urgency is Saif Ur Rehman, who is a former chief of accountability court and ex-aide of Prime Minister Nawaz Sharif. According to well placed sources, he is playing a major role in buying LNG from Qatar. It was learnt that Qatar LNG Company is insisting on terminal construction before signing any supply deal. Former Senator Saif Ur Rehman while talking to TheNation denied of any role in LNG import and said that he was settled in Qatar and looking after his business.
But experts also believe that Ogra did not provide level playing field in bidding and ETPL was facilitated as sole bidder. CEO, Elengy Terminal Pakistan Limited, Sheikh Imran ul Haq in an exclusive interview with The Nation denied that ETPL was sole bidder. "There were two bidders, one was disqualified as it did not complete requirements, Haq said. He did not explain the reasons on which his competitor's application was returned while his incomplete application was entertained.
The CEO admitted that they had received a letter from Ogra to complete prerequisite certificates and NOCs. He told that in reply they have written that they have submitted all required documents as per law and LNG policy. He termed objections from Port Qasim authorities on the location of proposed terminal baseless and said that according to international standards there was a 200 meter distance between jetties which is taken as safe distance. During a public hearing last month, at Port Qasim Karachi, port authorities objected proposed location of the terminal saying that LNG cannot be handled near chemical and other hazardous materials and it should be shifted to LNG zone, already dedicated for the handling of LNG.