Mazari identifies 7 irregularities in govt’s LNG deal with Qatar

The Pakistan Tehreek-e-Insaf’s (PTI) Central Information Secretary Shireen Mazari on Monday issued a strong critique of the Qatar LNG deal agreed by the Pakistan Muslim League- Nawaz (PML-N) government.
Mazari stated that the LNG deal in its present form was nothing less than a mega scam costing an astounding Rs 18 billion per year for 20 years.
The LNG would be procured by the government from a private US energy company, Conoco Phillips(CP), and not from Qatar unlike the government to government transfer claimed by the PML-N.
She stated some of the irregularities in this hastened deal. The first was the base cost of LNG from CP at Brent at $110/b was $16.99/mmbtu plus additional cost of about $2.50/mmbtu to be paid to ENGRO, resulting in a RLNG (Re-gasified LNG) cost of $19.49/mmbtu compared to $ 17.707/mmbtu. This would rob the people of Pakistan by about $180 million (or Rs 18 billion) per year, she added.
Furthermore, she said that the deal would not allow any price re-opener in the LNG price for the duration of the contract (20 years), whereas prices were expected to exponentially fall after 5 to7 years.
Another irregularity was that the deal required the government to ‘take or pay’ the committed LNG irrespective of Pakistan’s ability to lift, she added.
Moreover, she said that no tender was called by the ministry of petroleum and natural resources (MP&NR) for tolling, to store the LNG, re-gasify and deliver the RLNG to SSGC. A note by the MP&NR Secretary to the ECC claimed that only the EVTL could provide these facilities on a fast track basis, which was an attempt to fool the ECC according to Mazari. Mazari claimed that a better option of using the existing jetty/terminal facilities was available from a major port facility operator but the MP&NR, in its haste to justify the deal, was favouring the pre-selected ENGRO group.
She also claimed that the MP&NR had not considered the technical issues with the proposal, whereby ENGRO would supply the FSRU and deliver 500 mmcfd for about 5-6 days via two shipments a month to the SSGC. She added that Qatar had explicitly required to supply the LNG using its own Q-Flex carriers, and may not deliver the LNG to ENGRO-rented FSRU. The deal had also not considered that the Qatar Q-Flex carrier could not berth at ENGRO EVTL terminal, she added.
Mazari’s sixth point was that on 14th June 2013 the Supreme Court had directed that the government to ensure transparency and compliance with PPRA rules in the matter of LNG imports. An ENGRO company was one of the three companies whose bids were scrapped in an earlier round. Surprisingly, the Qatar deal was being negotiated with another Engro company, she added.
Her last observation was that the LPG terminals of SSGC and Engro which were to be converted to LNG terminals were in the main Port-Qasim area. She added that due to safety issues LNG terminals we not located near the main port areas anywhere else in the world. She claimed that authorities at Port Qasim were being pressurized by the MP&NR to agree to such unsafe terms.
Dr Mazari raised the issue of whether all these facts were brought to the notice of ECC members before getting them to approve the LNG deal on 18th July. ECC summaries were circulated 2 weeks in advance under normal circumstances which caused considerable doubt over the transparency of this deal, she added.