“They (investigators) have not sought any details from us, but they have got details of an LNG services agreement from Sui Southern Gas Company (SSGC),” said ETPL chief Syed Muhammad Ali during a press talk in Karachi earlier yesterday.
NAB was probing the whole process for the award of the LNG terminal contract, he said, but insisted that the process was transparent as the government had floated a tender in which ETPL was declared a successful bidder.
According to Ali, 22 rental floating terminals were working and ETPL’s floating terminal was one of them, which was completed in a very short time of about 11 months.
Pakistan is facing a shortfall of 2 billion cubic feet of gas per day and the LNG terminal, which was set up on a fast track, will minimise the shortfall. “The rental floating storage and regasification unit (FSRU) has been acquired on lease,” he said.
“Our capital investment is $150 million and initially Engro injected the capital,” he said, and the second part of investment went to FSRU hiring. “Now, we have financing from the IFC (International Finance Corporation), the ADB (Asian Development Bank) and a consortium of local banks.”
Ali pointed out that the LNG terminal had the capacity to handle 600 million cubic feet per day (mmcfd) and under an agreement with the government, in the first year it would be utilised up to 200 mmcfd. Since its start at the end of March this year, the terminal has handled 25 billion cubic feet of LNG.
The terminal’s tolling fee was $1.3 per mmbtu for the first year for handling 200 mmcfd, which will be reduced to $0.66 in the second year for handling 400 mmcfd.
Engro Corporation CEO Khalid Siraj Subhani, who was also present at the press talk, said the company’s investment was based on utilisation and the model was already being implemented.
“The government is required to pay capacity costs to the independent power producers (IPPs) if the capacity of power plants is not used and the same model is applied to the utilisation of LNG terminal,” he said.
Referring to talks with Qatar for LNG supply in a government-to-government arrangement, Subhani revealed that Engro representatives also attended the meetings with a Qatari team in which the main sticking point was the handling of large Q-Flex vessels. “Almost all issues have been addressed,” he said.
Pakistan and Qatar are negotiating the first LNG supply deal and they are close to signing it. “We have no role in this deal, however, there will be good news very soon,” he remarked. Gas reserves in Pakistan are depleting and LNG imports are a possible choice to address energy shortages on a fast track. The government is also working on Iran-Pakistan and Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline projects, but these will take time.
Subhani said Engro would take a decision on whether to bid for a second LNG terminal after a tender was floated. An onshore terminal would require a huge investment and its construction would take time, he said.
He clarified that the former CEO of ETPL, Sheikh Imranul Haque, was not a director on any company board and he was free to join any company.
He estimated the impact of increase in natural gas prices at Rs.160 per bag of urea, which had been passed on to consumers. The printing of price on fertiliser bags had no value as dealers had a list of prices, he stressed.