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PQA slaps $20mln fee for LNG terminal

February 12, 2016

KARACHI: The Port Qasim Authority (PQA) will charge a fee of $20 million for issuing of no-objection certificate to an operator for setting up a liquefied natural gas (LNG) terminal.

“All the bidders participating in second and subsequent terminal bidding process are advised to include $20 million in their financial bid for payment to PQA at the time of contract of work by the relevant authority,” said a notice issued by the authority in January. “So that PQA can carry out additional dredging for the commissioning of alternate channel as mandatory required for the efficient handling of LNG vessels.”

The Government Holdings Private Limited (GHPL) formed a subsidiary Pakistan LNG Terminal Limited to handle the second LNG terminal process.

Sources said the GHPL, however, eased the criterion for prospective investors interested in setting up the second LNG terminal in the country and removed the mandatory provision of acquiring no objection certificate (NOC) from the port before participating in the bidding process. 

“This may create controversy as NOC is not required with the bids and the successful bidder can acquire land for the project site later,” said a source. 

However, the request for proposal document binds a bidder to submit a valid provisional NOC from the PQA for setting up the terminal and the terminal’s proposed location at the time of signing the LNG services agreement.

“The PQA felt that the government criticised the role of the port in issuing a notice,” said a source. “The ministry of petroleum is not happy with this decision of the PQA and seeking its withdrawal.”

A source said the site requirement was mandatory earlier. “Without the site, you cannot put forward the tolling tariff because you do not know the cost of jetty, pipelines and dredging,” he added.

The authority official said PQA has to take precautionary measure to avoid any unforeseen situation. A second terminal site may affect the current terminals’ operation and necessitate extra dredging or cause other navigation channel issues and in that case PQA has the amount to deal with a situation, he added.

The official said a LNG terminal operator can pay $20 million or directly spend money on dredging and the construction of passing bay. 

“If these precautions are not taken the port operation may be disturbed when a LNG vessel arrives,” he added.

Historically, Sui Southern Gas Company and Sui Northern Gas Pipelines Limited were to deal with the matters pertaining to establishing LNG terminals in the country.

In the previous tender for second LNG bidding, Engro was disqualified because the company did not acquire a NOC from PQA. 

Other companies, which participated in the tender, were Akbar Associates and Gasport/Fotco. The tender was scrapped.