ISLAMABAD: The Ministry of Energy (Petroleum Division) submitted an interim report in the Supreme Court and tried to justify the government for signing LNG project with Qatar while senior investigative journalist Asad Kharal claimed that this 15-year dubious deal would cause Rs 400 billion loss to the national exchequer.
During the hearing of LNG mega scam case on 27 June, 2018, the Supreme Court was told that Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan (IP) gas pipeline projects could not be undertaken due to security issues.
“In the wake of this situation, the import of LNG appears to be the most viable solution to meet the energy deficit,” says the interim report.
The report states that Pakistan is an energy-deficit country where demand outstrips supply that has adversely affected the economic growth of the country.
“Indigenous resources are not sufficient to meet the energy demand; therefore, there is a need for imported energy for sustainable economic development of Pakistan,” it added.
It is also submitted that in the past attempts were made for the import of LNG on an integrated basis, i.e., the onus to develop the terminal and other allied infrastructures would be on suppliers.
However, the government decided to follow an ‘unbundled approach’ with separate contracts for the LNG procurement and regasification rather than an integrated approach to import LNG.
The report says that tolling charges of the terminal were determined on the basis of a competitive bidding process undertaken by Inter-State Gas System (ISGA). The tender process was approved by the boards of ISGA and SSGL, the report said.
Deputy Attorney General Nassar Mirza on Wednesday requested a three-judge bench headed by Chief Justice of Pakistan Mian Saqib Nisar to give three weeks to submit a comprehensive report in the petition filed by senior investigative journalist Asad Kharal.
The applicant contended that OGRA being a competent forum was ignored to decide/notify LNG prices. “Twenty shipments of LNG were procured on spot without the government-to-government agreement.”
He also alleged that the Port Qasim Authority first objected to the project because of congestion at the port but mischievously agreed later on, and $13 million are being paid per year for only four tugs, that they had rented to the OLNG FRSU. The hearing of the case was adjourned for three weeks.
“The price (13.37% of Brent crude) negotiated with Qatar was at a higher rate as Qatar was the source supplier of LNG whereas trading companies in open market were offering average rates lower than the one finalised with Qatar,” according to the audit report issued by the Auditor General of Pakistan (AGP).
The price negotiation committee had recommended 13.9% of the Brent price, but the final deal was signed at 13.37% on the basis of short-term contracts that PSO signed with global commodity trader Gunvor for 60 LNG shipments, said the report.
But Pakistan entered into a 15-year contract that would require approximately 500 shipments, it added.
Former Prime Minister Shahid Khaqan Abbasi had justified the LNG contract with Qatar, claiming that Pakistan had settled for the cheapest price among all 15-year term contracts in the world.
Responding to a calling attention notice in the Senate, he described the agreement negotiated for about 14 months as a big achievement. Pointing out that Pakistan was purchasing LNG at 13.3 per cent of Brent while Japan — the largest importer of LNG — was buying it at 14.5-15pc of Brent.
On February 10, 2016, Pakistan and Qatar had signed an agreement for the supply of around one billion US dollars-worth of LNG to Pakistan annually to overcome the energy crisis in the country.
