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December 31, 2018

Plan to import LNG, POL on deferred payment under IGA umbrella


December 31, 2018

ISLAMABAD: The PTI government has carved out a plan under which it will make new government-to-government agreements for import of LNG and POL products on defer payments and to this effect the Economic Coordination Committee (ECC) may accord approval to the fuel supply agreement between the Pakistan State Oil (PSO) and State Oil Company of Azerbaijan (SOCAR) today (Monday).

According to sources, the government is also in the process of seeking LNG from Qatar on deferred payment. Pakistan in toto imports LNG worth $2 billion in a year from Qatar alone under 15 years’ agreement. The PSO’s top official says that in case of approval by the ECC, the SOCAR will under credit terms provide PSO the petroleum oil lubricants (POL) for 90 days.

However, a senior official of the Petroleum Division said that ECC may give task to Pakistan LNG Limited (PLL) instead of PSO for initiating talks on LNG import agreement from Azerbaijan as the last ECC meeting had decided to get the LNG agreement of PSO with Qatar novated to PLL.

And more interestingly, the PLL and SOCAR had been engaged for Inter-Government Agreement (IGA) on LNG import, but because of high rates by the SOCAR, PLL had lost its interest. However, some elements in the government want the go-ahead from ECC for formally initiating talks on credit terms for agreement on LNG import between PSO and SOCAR. However the PSO can make agreement with the SOCAR on POL import, but not on LNG import as it is the sole prerogative of the PLL to make deal on LNG.

After deal with Saudi Arabia, the official said, the authorities have felt that Pakistan should sign agreements on LNG on defer payment facility. Azerbaijan has also desired being the part of any joint venture to invest in installing refineries or laying down any gas pipeline in Pakistan. Firstly, the State Oil Company of Azerbaijan wanted to provide POL products on deferred payment, but lately the issue of LNG import on defer payment is included in the agreement.

The authorities after oil facility from Saudi Arabia are no more interested in import of POL agreements as the oil facility by the UAE, which will be at par with Saudi Arabia, is also on the cards. The government of the day is now more interested in importing LNG on deferred payment facility.

He claimed that this particular issue of importing POL and LNG on deferred payment will get figured out in the ECC meeting to be held today (Monday).

It is pertinent to mention that Finance Minister Asad Umar and Foreign Minister Shah Mehmood Qureshi in latest interactions with Qatari authorities have also taken up the issue of import of LNG on deferred payment. Factually, it was Chief of Army Staff General Qamar Javed Bajwa who initiated the talks with Qatari government for LNG import facility on deferred payment.

Pakistan imports LNG from Qatar valuing $2 billion every year under price formula of 13.37 percent of the Brent, but the PTI and its government before and soon after coming into power had been claiming that the deal with Qatar is questionable and its price is also at higher side and it will unfold the deal and make it public. The NAB is already in the process to probe the deal with Qatar to find out the fault lines in the agreements and omissions and commissions as well. But now the PTI government is engaged with top authorities of Qatar for LNG on deferred payment.

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