Another rental power?

Capital suggestion
2006: Under the Musharraf government ABN AMRO/Poten & Partners were tasked to undertake a ‘Marine Facilities Assessment’ for an ‘SSGC Integrated LNG Import Project’. The ‘Marine Facilities Assessment’ report made it clear to the Musharraf government that in order to bring in Qatari Qflex and Qmax LNG ships the required minimum dredge depth had to be 14 meters. The ABN AMRO report also informed the government that a channel width of 250 meters and 275 meters would be required for the Qflex and Qmax vessels.
2014: On April 30, the Sui Southern Gas Company (SSGC) signed a $1.5 billion, 15 year re-gasification agreement with Elengy Terminal Pakistan Limited (which is a subsidiary of Engro Corporation Limited). The agreement stipulates a fixed capacity charge of $272,479 per day (Year 1) to be paid by SSGC to Elengy Terminal Pakistan Limited.
The agreement further stipulates that the ‘terminal will be for tolling services having a capacity of 200 million cubic feet of gas per day (mmcfd) in year-1 and 400 mmcfd from year-2 till the end of the contact term of 15 years’.
2015: The Port Qasim Authority issued a ‘PQA Notice to Mariner No 73/2015’ announcing that the permissible draught for LNG-1 is 12 meters.
Lo and behold, SSGC has signed a $1.5 billion, 15-year re-gasification agreement with Elengy Terminal Pakistan Limited. Lo and behold, Qatari Qflex and Qmax LNG ships require a minimum dredge depth of 14 meters. Badly stuck, here’s SSGC’s stroke of genius: If Qatari Qflex and Qmax LNG ships cannot enter our channels we will send the FSRU (floating storage & re-gasification unit) out into the open seas to fetch back LNG.
Lo and behold, the FSRU has been doing just that – starting March 26 till today, the 12th of July, 2015. In the process, however, the $1.5 billion, 15-year re-gasification agreement with Elengy Terminal Pakistan Limited has become – more or less – what the rental power agreements were during the PPP government.
Here’s why: back during the PPP days, we were paying a fixed rental to rental power plants but the power plants were not producing the contracted amount of electricity. With the re-gasification agreement, we are paying $272,476 per day every day of the year for the following 15 years but the throughput is less than the contracted throughput.
Over the 13-week period starting March 26, SSGC has lost a billion rupees if not more – and the re-gasification agreement has at least 14 years and eight months to go. How many more billions of public money is yet to go down the drain? Question: who will be taking in a hefty $46 million every six months for the following 15 years and laughing all the way to the bank? Answer: Elengy Terminal Pakistan Limited.
The mother of all questions is: why did SSGC, knowing full well that Qatari Qflex and Qmax LNG ships cannot enter our channels, sign the dreaded $1.5 billion, 15 year re-gasification agreement with Elengy Terminal Pakistan Limited?
This may indeed be an expensive question for SSGC to answer. I do not know who said, “A psychiatrist is a fellow who asks you a lot of expensive questions your wife asks for nothing” but I know that Albert Einstein said, “The important thing is not to stop questioning.”
The writer is a columnist based in Islamabad.
Email: farrukh15@hotmail.com. Twitter: @saleemfarrukh