Govt clarifies LNG deal news item

Islamabad
Apropos to the news item ‘Rs200 bn loss in LNG deal, claims NAB inquiry” that appeared in The News on November 19th, 2015.
The said article, by design or ignorance, heavily draws on conjectures, inferences that have given the story a speculative outlook. It has also blatantly misreported facts by presenting a distorted picture of the objective realities on ground, a statement from the Ministry of Petroleum and Natural Resources on Thursday.
The Liquefied Natural Gas (LNG) infrastructure development and procurement process is critical to Pakistan’s energy needs and a top priority of the Ministry of Petroleum and Natural Resources. The Ministry has maintained oversight over all LNG related activities by its companies and personal supervision of the same by the Federal Minister for Petroleum and Natural Resources to ensure high standards of transparency, merit, laid down rules and regulations.
After no less than five failures at setting up LNG infrastructure with an integrated approach between 2006-2013, the government decided to follow an unbundled approach to LNG using separate contracts for LNG terminals and procurement. ISGS, a 100% government owned company with expertise in handling large scale infrastructure projects, was tasked with facilitating and coordinating the re gasification terminal procurement process for SSGC.
The necessary written authorization to this end was given to ISGS and SSGC by Ministry of Petroleum and Natural Resources. The outcome of all these indefatigable efforts was the completion of the country’s first LNG terminal in an unprecedented time period of 11 months.
Since considerations such as merit, transparency and guarded oversight were primary, not even a single penny was utilized from the taxpayer’s money.
The reporter, in a figment of his imagination, cites violation of rules where-as the contractor was selected through a PPRA compliant, competitive, sealed envelope two stage bid

process by SSGC. This process remains documented and on record. It is noteworthy that the contractor will recover its investment and profits through a re-gasification tolling fee of $0.66/MMBTU including all operating costs over the 15 year lifetime of the project. This is one of the lowest re gasification tolling fees in the world for a floating re-gasification LNG Terminal. The reporter remains oblivious with respect to differentiating between capex and opex since the operator in addition to initial investment has to incur high operational expenditure, notably the lease cost of the FSRU. Moreover, it is only after the SSGC Board approval that the LNG service agreement was negotiated and later awarded. It is categorically denied that there was ever any unsigned or verbal communication in this regard.
Anywhere in the world, such LNG infrastructure story would be cited as a proud moment for Pakistan and it has been cited as such; except, unfortunately, within the country by certain vested interests.
The diligence, perseverance and untiring efforts of the Ministry’s team means that re-gasified LNG from this terminal will provide Pakistan’s power sector with sustainable annual savings of Rs 80 to 100 billion. The future LNG projects will lower our power generation costs by Rs.300 billion per year and LNG is already touted as a game changer for our energy’s economy.
Despite the odds, obstacles and in the face of opposition from well entrenched interests, the Ministry has succeeded by ensuring these positive developments only by rigorously following transparency and established rules, laws and regulations. An example of this being the appreciation and recognition from Transparency International Pakistan itself. The Ministry remains undeterred in its objective of working in the national interest despite these challenges and remains open to any queries and questioning regarding the project. It is regretful that a handful of individuals with vested interests are bent on creating controversies with complete disregard for Pakistan’s national interests.
Khalid Mustafa Adds: The story is purely based on the interim inquiry report of National Accountability Bureau (NAB) and no additional word has been added to the story by me. The story is the true reflection of the NAB report. However, in the rebuttal, no clarification has been given to the issues highlighted by the NAB’s report. And on top of that the calculated version of Federal Minister for Petroleum and Natural Resources Shahid Khan Abbasi has not only been added to the story, but also the detailed response of Chief Executive of Engro Vopak Terminal Syed Mohammad Ali was also included. So The News stands by its story.