ECC discusses import of LNG from Azerbaijan firm today

ISLAMABAD: The Economic Coordination Committee (ECC) that meets here today (Wednesday) with Finance Minister Senator Ishaq Dar will take up for the third time the issue of approval for the import of distressed Liquefied Natural Gas (LNG) from an Azerbaijan firm SOCAR, based in UK.

The ECC may also approve Solar Panel & Allied Equipment Manufacturing Policy, 2023. It may also approve the allocation of additional funds for the Repair & Maintenance of “IB3160-Supreme Court of Pakistan Building, Islamabad, and the Repair & Maintenance of Judges’ residences, rest houses & sub-offices in various cities under Demand No”50-H&W” for the Year 2022-23.

The other agenda items ECC will take up for approval include supplementary grants of Rs.404.769 million for various requirements of 6 Aviation Squadron, Rs500 million in favour of Ministry of Housing & Works Demand No. “128-Capital Outlay on Civil Works” during the CFY 2022-23.

The meeting may also approve the Provision of Funds to Heavy Electrical Complex (HEC) for the payment of employees’ salaries, operational expenses markup amount to Bank of Khyber, and mutation fee for transfer of HEC Land to SEC.

Coming to the deal about import of LNG from SOCAR, according to the relevant officials, the

ECC that met on June 7, 2023 was not satisfied with the Petroleum Division’s summary, which did not provide a clear rationale for the urgency of the deal with Azerbaijan’s state-owned company SOCAR.

The participants of the ECC meeting earlier found the summary confusing with no tangible demand for LNG in the country and the issue of the price recovery mechanism not resolved to the satisfaction of the ECC. Objections were raised once again by the Chairman of the Energy Task Force and former prime minister Shahid Khaqan Abbasi.

Abbasi had also questioned the urgency of the agreement with SOCAR and asked the petroleum division officials to first explain the rationale behind the ‘questionable’ urgency for signing the agreement with no clear price mechanism and solid demand as well.

The official said Abbasi in June 7 meeting argued that every cargo has its own cost. Long and medium-term cargos have different prices, which could be much less than the cargo in the spot market. Explaining the pricing issue, the official said that if the long and medium-term cargo was sold by SOCAR as distressed cargo, its price would be much less price than that of the prevalent spot cargo.

However, the summary mentions it as part of the price evaluation mechanism, which states that the offered cargo price would be compared with the prevalent spot cargo price.

In the June 7 meeting, it was also observed that the summary did not mention SOCAR-UK, a subsidiary of SOCAR, with which the PLL will sign the agreement.