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March 6, 2019

ECC accords conditional approval for setting up new LNG terminal

Business

March 6, 2019

ISLAMABAD: The Economic Coordination Committee (ECC) on Tuesday directed authorities concerned to ensure supply of LNG without interruption due to war or any other contingency, while according conditional approval for setting up new LNG terminal at Port Qasim before winter.

The ECC of the Cabinet in its meeting chaired by Finance Minister Asad Umar on Tuesday considered proposals from different ministries/divisions. The minister made it clear that all pre-requisites and codal formalities should be fulfilled before making this new terminal operational ahead of upcoming winter season. “Without fulfilling the pre-requisites this project cannot be completed,” he said.

The ECC also granted approval for supplementary grants of Rs1,813.755 million for the Ministry of Interior against total demands of Rs2,877.017 million. The supplementary grants were meant for Islamabad Capital Territory (ICT) administration, Directorate of Immigration and Passports and for Pakistan Rangers.

The Ministry of Maritimes tabled a summary before the ECC that the ministry was cognizant of the traffic congestion at Port Qasim due to issues arising out of incurring LNG vessels, and the issue was taken up with the ECC in recent months.

The ministry decided that the main channel of Port Qasim should not house the LNG terminal any more to ensure that the port remained functional for other cargo.

The ECC was apprised that there was no scientific study identifying a specific a LNG zone, however, Port Qasim Authority Board through resolution dated May 7, 2011 had identified Jharri Creek/Chann Wadoo as potential LNG zone for future.

The Ministry directed PQA in December 2018 for undertaking a scientific study through third party.

Ideally the process of setting up LNG terminal should be initiated after the scientific study.

But, in view of the projected demand of LNG in near future, the ECC in its decision dated 12-2-2019 directed the Ministry of Maritimes Affairs to expeditiously finalise the proposal for setting up of an additional LNG terminal and submit the same to the ECC.

In view of the urgency, the Jhari Creek/Chann Wadoo might be the most appropriate area for establishing an additional LNG terminal owing to certain advantages. Those advantages include no negative impact on normal traffic, as the site was on the alternate channel away from the main port, which would be connected through a pipe network of about 25 kilometres.

The existing two LNG terminals at PQA have been contracted on take or leave basis costing government more than 0.5 million dollar per day which places undue financial burden on the government.

There was need to ensure that the supply of LNG was not interrupted due to war/ any other contingency.

In view of all, the ECC might consider the proposal to fast track the additional LNG terminal in the vicinity of Jharri Creek/Chann Wadoo within 20 months, with the direction to PQA and Oil and Gas Regulatory Authority to expedite process of grant of license.

The future LNG terminal would await result of the scientific study undertaken by PQA or all future LNG terminals could be contracted without any guaranteed payment by the government on BOT basis. The minister directed to meet all pre-requisites before moving ahead.

According to official statement issued by the Ministry of Finance after the ECC, the Ministry of Maritime Affairs briefed the ECC on matters relating to establishment of new LNG terminals at Port Qasim.

The committee was informed that the Port Qasim Authority was looking at various choices with a view to find the most viable option.

The committee gave instructions to expedite the matter and directed for completion of all formalities for setting up the new terminal expeditiously keeping in view the growing energy needs of the country.

ECC approved proposal of Ministry of Energy based on request by Pakistan Petroleum Ltd for allocation of up to 9mmcfd gas from Fazl X-1 field in Matiari district to M/S Sui Southern Gas Company.

The committee also considered and approved various proposals relating to supplementary grants.

It should be recalled that such grants were previously approved by the Ministry of Finance, however in order to make the process more transparent, these were now considered and approved at the ECC/ Cabinet level.