Govt recovers $20mln on port charges from LNG suppliers

ISLAMABAD: The government has recovered more than half of $40 million paid to liquefied natural gas (LNG) suppliers on account of port charges in the past five years.

The government made recovery of excess payments made to LNG suppliers in lieu of port charges on vessel handling, an official statement said on Tuesday. “More than half has already been recovered while the rest is in process.”

Pakistan State Oil (PSO) signed a contract with Gunvor and Pakistan LNG Limited (PLL) signed a contract with ENI in 2016.

Under these contracts, port charges of up to $500,000 per vessel were to be borne by the suppliers and any excess was to be paid by the importer – PSO or PLL. During the previous government, port charges in excess of $500,000 were claimed by the suppliers and reimbursed by PSO and PLL.

The total amount was approximately $40 million, starting from 2016.

“In 2019, the present government directed PSO/PLL to look at all charges to see how they could be reduced,” said an official statement. “In this process, it was revealed that some of these excess charges, which were indeed paid to PQA [Port Qasim Authority], could be excluded from the definition and would therefore, become the responsibility of suppliers under the legal interpretation.”

Upon direction of the ministry of energy, PSO and PLL took up the matter with the suppliers who disagreed with the interpretation.

"PSO has since adjusted these charges from its supplier, Gunvor. The government asked for a detailed forensic audit to establish how this illegal practice was continuing for the last five years and why previous managing director and present management failed to take any remedial measures.

PLL has also started the process of recovering the charges.

The country started importing LNG five years back to meet widening gap in demand and supply of gas. It has imported more than 19 million tons of LNG since 2015 with two re-gasification LNG terminals operational in the country.

The demand supply gap during FY2019 was 1.4 billion cubic feet per day (mmcfd), which is expected to rise to 3.7 bcfd by FY2025 and 5.4 bcfd by FY2030, according to Oil and Gas and Regulatory Authority (Ogra).

The main consumer of gas was power sector, consuming 38 percent, followed by domestic sector 22 percent, fertiliser 16 percent, general industry 9 percent and captive power 8 percent of the total gas consumed during FY2018/19.