- Ministers give nod to LNG import from Qatar, electricity import from Iran
- Govt ministers decide to give peace talks with Taliban ‘another chance’
- Nawaz wants development projects in Balochistan expedited
In a bid to meet the country’s energy needs in the short and long-terms, the federal cabinet on Friday approved the fast-tracking of $1.2 billion-worth liquefied natural gas (LNG) services agreement with Engro Pak Terminal Limited (EPTL), while also giving approval to a memorandum of understanding (MoU) for import of 3,000MW from Iran under a long-term contract.
The meeting also endorsed the decisions taken during the Cabinet Committee on National Security (CCNS), supporting the government’s decision to continue peace dialogue with the banned Tehreek-e-Taliban Pakistan (TTP) despite their ending of the ceasefire.
The cabinet’s approval for a deal with the EPTL would help import liquefied natural gas (LNG) from Qatar. For the purpose, the government will sign an agreement with Engro which would provide services of its terminal for storing LNG. The government would pay $0.66/MMBTU for LNG services project secured through competitive bidding process by Ministry of Petroleum and Natural Resources.
The cabinet also decided that the policy guidelines of the tariff shall be conveyed to the OGRA. It was further decided that the other aspects of the commercial agreement will be settled between the two parties – SSGC and EPTL.
LNG PRICING:
Minister for Petroleum Shahid Khaqan Abbasi while briefing the cabinet said that the price of LNG is competitive with the international market. He said that the contract will be for 15 years and will provide 200 MMBTU of LNG in 1st year and it would be increased to 400 MMBTU from the second year.
The import of 400 Million Cubic Feet per Day (MMCFD) of LNG would help save up to $1 billion dollars annually, officials in the petroleum ministry said.
Global power generation efficiency average from gas is almost 45 percent which is 10 percent more than the 35 percent efficiency level of oil based power plants. If oil is replaced with proposed 4 MMCFD of LNG per annum, it will give a cost advantage of nearly $1 billion per year over fuel oils including diesel and furnace oil. The government is trying to bring the first shipment of imported LNG by the end of November 2014.
Under the LNG services agreement, the SSGCL would pay 0.66cents/mmbtu to EVTL on account of terminal charges, as terminal would be used for re-gasification and storage purposes. The agreement also includes certain conditions and Engro would be responsible for putting its 400mmcfd capacity terminal operational within 11 months after the signing of the agreement.
According to two major conditions of the agreement, the SSGCL would not pay any charges under the head capacity in case of no import of gas to the country. Secondly, SSGCL would not pay the price of gas likely to be wasted on account of technical losses.
A board of SSGC on January 28 this year had achieved a major milestone towards bringing imported Liquefied Natural Gas (LNG) to the country by approving a plan for construction of new terminal for import of Liquefied Natural Gas (LNG) at Port Qasim to a subsidiary of Engro Corporation with certain conditions.
ELECTRICTY FROM IRAN:
Under the agreement for the import of 3000MW electricity from Iran, Pakistan could secure uninterruptible supply of electricity by looking at all avenues. The issue of load shedding might be controlled, and even eliminated, to some extent by importing 3000mw from Iran.
The Al-Aqili Group, a Dubai-based international firm, has offered to supply 3,000MW to Pakistan from Iran under a long-term contract and also signed a memorandum of understanding with the Ministry of Water and Power. The group will also finance and lay transmission lines to add electricity to the national grid under the terms of the agreement.
BALOCHISTAN DEVELOPMENT:
The cabinet also expressed support for Prime Minister Nawaz Sharif’s vision of taking forward the development projects in Balochistan. Prime Minister Sharif stated that the socio-economic package for the violence-hit province included provision of skilled manpower through training of human resource in different sectors, including health and education, while development of health and education infrastructure to cater for the people of Baluchistan have also been planned.
“The development in Balochistan is a priority for the government and development plans to put Balochistan on road to progress are being implemented expeditiously. Gwadar is being developed as a model city and socio-economic package has been planned for it. Gwadar Airport and Port are being developed on modern lines. $1.6 billion will be spent on these projects. I myself will monitor these projects,” Sharif told his cabinet ministers.
Minister for Interior Chauhdry Nisar Ali Khan briefed the cabinet on the overall security situation, dialogue process with the Taliban and ongoing targeted operation in Karachi, while Finance Minister Ishaq Dar gave a detailed briefing on the economic situation of the country and upcoming projects.