That awkward moment when Planning Commission spoils all the planning

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A hurriedly called ministerial meeting to finalise plans for the import of the Liquefied Natural Gas (LNG) on government to government (G2G) basis ended inconclusively due to the refusal of the Planning Commission (PC) to withdraw its objections and absence of some of the members on Thursday.
An official source said the convener of the committee and Minister for IT Raja Pervez Ashraf pointed out at the outset that since some of members of the committee were not present they could not discuss the agenda. Two important federal secretaries of finance and law were not present in the meeting. The meeting was convened on a short notice by the Petroleum Ministry instead of its convener.
The committee was constituted by the Economic Coordination Committee (ECC) on May 15 with Raja Pervez Ashraf as convener to look into modalities of LNG import. The committee had held three meetings during which the finance ministry refused to extend sovereign guarantees for LNG import, while PC recommended hiring an independent consultant to assess the feasibility of the project and Special Advisor to Prime Minister Kamal Majeed Ullah asked for shifting the project from Karachi port to Gwadar Port.
Petroleum Minister Dr. Asim Hussain said the proposal was important one to counter the gas shortages in the country and stressed they could not afford to linger on with the issue. On his proposal it was decided that the committee will be again meeting on June 16. It was decided that all the members will be directed to ensure their presence on Saturday. Petroleum Ministry, the source said is bent upon to get an expeditious approval of the project from the committee without any reservations.
However, PC refused to accept the demand of the Petroleum Minister for withdrawing from the record its demand to hire an independent consultant. PC has refused to extend blind support to the project saying that there are many flaws in the integrated LNG import programme including a terminal and gas supplies. It is of the view that acceptance of bids of two firms for one project would violate PPRA rules and the relaxation in rules would favour some private firms involved in import. After failure of the private sector to expedite LNG imports, the Petroleum Ministry had floated proposal under which two companies could be given permission to import LNG on a deal to be signed on G2G basis. It was proposed that the base load volume of RLNG will be 800 mmcfd, spread over 2 separate LNG developers, 400 mmcfd each, at delivery point under 10 years contractual arrangement. It is seeking approval to allow two selected private parties to make spot purchases of LNG from Algeria, Qatar, South Korea and Malaysia on G2G basis.
Pakistan is faced with a severe gas shortage exceeding 2 billion cubic feet per day (bcfd) as the local production is unable to keep pace with the requirements of the country. Petroleum Ministry is stressing importing LNG to mitigate the crisis. Imported LNG will be received, stored and re-gasified and delivered through connecting pipelines to the existing transmission pipeline network as Re-gasified LNG (RLNG). The RLNG price will be factored in the Weighted Average Cost of Gas (WACOG).

1 COMMENT

  1. The Energy Minister is on the right track. LNG suppliers don't like dealing with middle men, they want G2G deals. Hopefully the Planning Commission will listen to the argument with an open mind and not unnecessarily prolong the energy crisis.

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