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April 19, 2014

Import of LNG from Qatar, power from Iran approved

 
April 19, 2014

ISLAMABAD: The federal cabinet, which met here on Friday with Prime Minister Muhammad Nawaz Sharif in the chair, approved the import of Liquefied Natural Gas (LNG) from Qatar and 3,000MW electricity from Iran.
The cabinet, while endorsing the decisions taken during the meeting of the Cabinet Committee on National Security, resolved that the dialogue process with the proscribed Tehreek-i-Taliban Pakistan (TTP) should continue, giving peace another chance.
Prime Minister Nawaz Sharif took the cabinet into confidence on the decisions taken during Thursday’s meeting of the National Security Committee.The ministers also reviewed the country’s security and the overall economic situation along with the premier briefing them on his recent meeting with former president Asif Ali Zardari.
Minister for Interior Chaudhry Nisar Ali Khan briefed the cabinet on the overall security situation, the dialogue process with the Taliban and the ongoing targeted operation in Karachi.The federal cabinet accorded partial approval to the much-talked-about $2 billion LNG Services Agreement (LSA) for 15 years, locking in tariff of 66 cents per MMBTU.
The approval leaves commercial aspects of the agreement to the contracting parties (ETPL of Engro Corporation and state-owned Sui Southern).
“The cabinet allowed the boil-off under 1 percent while ETPL of Engro Corporation wanted boil-off permitted at up to 2.5 percent and left the commercial aspects of the agreement to the contracting parties (ETPL and Sui Southern),” a senior official of the Ministry of Petroleum and Natural Resources, who also attended the meeting, told The News.
The boil off means the gas which gets wasted during the re-gasification and the ETPL has to absorb cost of boil-off above 1 percent as it earlier wanted the Sui Southern to absorb the cost of the gas to be wasted in re-gasification. “The cabinet also decided that policy guidelines of the tariff would be conveyed to Ogra.”
However,

Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, when contacted and questioned if the cabinet had partially approved the LSA as it approved the tariff of LNG terminal of 66 cents per MMBTU leaving the commercial aspects to the contracting companies, responded in a few words saying the cabinet approved everything mentioned in the LSA.
But in the press release of the cabinet meeting, it is clearly mentioned that the cabinet has decided that other aspects of the commercial agreement will be settled between the two parties, the SSGC and EPTL.
The petroleum minister, while briefing the cabinet, stated that the LNG price was competitive with the international market. He said that the contract would be for 15 years and would provide 200 MMBTU of LNG in the first year and which would be increased to 400 MMBTU from the second year.
When contacted, CEO of EVTL Imranul Haq Sheikh said, “Yes, the press release says that other aspects of the commercial agreement will be settled between the two parties, SSGC and EPTL, but in my view no aspect is left as all the commercial issues with SSGC have been settled and initialled and not one is left open.”
He also responded to a question that his company never wanted the boil-off permitted up to 2.5 percent. However, he said, “Suppose the government imports 400 MMCFD LNG, one percent boil-off cost is allowed, but if it goes up over 1 percent, the ETPL will have to pay penalty to Sui Southern under a specific formula.”
Sheikh said that after getting cleared by the federal cabinet, the ETPL and Sui Southern would formally ink the LNG services agreement and after the period of 35 days, the company would start constructing the LNG terminal at Port Qasim.
About the LNG licence that the ETPL has applied to Ogra for initiating the construction of the terminal and LNG imports, Sheikh said he was optimistic that Ogra would issue the licence to the Engro next week and ETPL and Sui Southern would formally sign the LNG services agreement.
When his attention was drawn towards the suspension of the Executive Director by Ogra’s top management because of his consolidated report saying that the application of ETPL was not complete and Ogra should not entertain it as it lacked the NoCs from the Defence Ministry, Ministry of Environment, Civil Aviation Authority (CAA), and Department of Explosives, Sheikh said he did not know why the executive director in Ogra was suspended.
Sheikh, however, confirmed that Ogra had asked the ETPL to provide the NoCs from various ministries and the ETPL had complied with the instructions. “We have asked the Ogra that the NoC from the Ministry of Defence is not required under the rules at the preliminary stage. However, it will be arranged once the consortium activities of terminal get started and completed,” he concluded.
The federal cabinet also okayed signing of a Memorandum of Understanding (MoU) for the import of electricity from Iran.The MoU between the two countries would be signed by Prime Minister Nawaz Sharif during his visit to Iran. Pakistan would import 3,000MW of electricity from Iran according to a draft of the MoU.
Meanwhile, the prime minister said that bringing peace in Balochistan was also a priority of the government to ensure sustainable economic activities and socio-economic development of the people of the province.
Nawaz Sharif also announced to personally monitor the development projects in Balochistan as he would undertake extensive visits to the province shortly. He vowed to ensure spending of public money judiciously and efficiently. “The economy is our top priority and we are providing an equal attention to all parts of Pakistan,” he said.
Nawaz Sharif said that $1.6 billion would be spent on the construction of an airport and seaport in Gwadar.He said that a heavy amount would also be spent on education, health, infrastructure and training of youth in Balochistan.
Prime Minister Nawaz Sharif directed to complete the Gwadar Port extension project on priority basis to give a big boost to economic activities in the country.He said that development projects worth $1.6 billion would be completed in Balochistan, which would help expedite development of the province.
He directed to take solid measures for improvement of education and health system in the province. He expressed the confidence that the projects launched in Balochistan would help bring about a revolutionary change in the lives of the people of Balochistan.
The federal cabinet also approved signing of an agreement between the defence ministries of Russia and Pakistan on military cooperation. The federal cabinet discussed and disposed of all agenda items which were 41, yet another record. The cabinet meeting continued for three hours and it was a rare occasion that the meeting took place on Friday and started strictly at the scheduled time of 9am.
The amendment in the CDA Ordinance, 1960 was deferred. The proposed amendments in the Patent Ordinance 2000 regarding Electronic Publication of patent journal were discussed and approved. The cabinet granted approval in principle for draft bill for Creation of Joint Maritime Information Organisation (JMIO).
The amendment in Foreign Exchange Regulation Act, 1947 (FERA, 1947) was also approved. The SBP (Amendment) Bill 2010 and the SBP Banking Services Corporation Ordinance (Repeal) Bill 2010, Equity Participation Fund Repeal Bill-2014, reconsideration of the decision of the cabinet regarding repealing of Section 27B of the Banking Companies Ordinance, 1962 were approved by the cabinet. The cabinet deferred the Right to Information Bill, 2014 and the prime minister directed the ministry concerned to undertake further consultations with the opposition and other stakeholders.
Approval was given to start negotiations and approval for signing of memorandum of cooperation between the Chamber of Commerce and Industry of Turkmenistan and the Trade Development Authority of Pakistan (TDAP). Formal approval of the cabinet was accorded for signing of an MoU between Pakistan and China on the Raikot-Islamabad section of China-Pak Economic Corridor by the China Road and Bridge Corporation (CRBC).