ECC okays construction of second LNG terminal

ISLAMABAD: After establishing a committee to resolve the litigation issues, the ECC, under the chairmanship of the Finance Minister Ishaq Dar, has accorded approval for the setting up of subsidiaries for the import of liquefied natural gas (LNG) and construction of a second LNG terminal.
The Economic Coordination Committee (ECC) of the Cabinet, which met with the finance minister in the chair, also set up a committee to review the legal requirements on the issue of construction of a second LNG terminal in order to minimise the gas shortfall through imports.
The ECC also approved the proposals of the Ministry of Water and Power to allow the Water and Power Development Authority (Wapda) to raise commercial financing of Rs144 billion for the Dasu-I project, and Rs100 billion for Neelum-Jhelum Hydropower Project from local banks through conventional/Islamic mode of financing under government guarantees.
According to the summary moved by the Ministry of Petroleum and Natural Resources before the ECC, Pakistan is currently facing a severe shortage of natural gas both for its electricity generation plants and for general use by all sectors.
The domestic gas production of 4,000 MMCFD is unable to meet demands and the supply-demand gap is approximately 2,000 MMCFD and keeps on rising. It is not only causing hardships for public but also hindering the country’s growth. Therefore, the government is pursuing import of LNG to minimise the gas shortfall.
In order to mitigate the huge demand-supply gap, the Sui Southern Gas Company Limited (SSGC) started a bidding process for the second LNG terminal in October 2014; however, one party in the bidding process i.e. Pakistan Gasport went to the Sindh High Court (SHC) on the plea that the winning party, Akbar Associates Pvt Limited, had not submitted legal documents. The SHC had ordered to cancel the process.
The official summary of the Ministry of Petroleum states that since the country is facing an energy crisis which requires immediate measures to be taken, the Ministry of Petroleum & Natural Resources is of the view that in order to address the issue a second fast-track LNG terminal is immediately required to be completed on a war-footing.
In view of the above and to move forward, it was proposed by the ministry that M/s Govt Holding (Pvt) Ltd (GHPL) which is primarily looking after the working interest of the govt in the Exploration and Production Sector, may be mandated to start the process for the construction of the second LNG terminal having capacity of up to 500 MMCFD at the Port Qasim under tolling arrangements through open competitive bidding process under applicable rules, including the PPRA Rules.
The selected project developer will be responsible for installation of LNG terminal/re-gasification of LNG and delivery to the SSGC’s designated delivery point. M/s GHPL may hire a commercial aspects for construction of the terminal.
On a proposal of the Ministry of Commerce, the ECC allowed the Trading Corporation of Pakistan (TCP) to sell balance lint cotton stock available with them on retail daily basis at minimum of the Karachi Cotton Association spot rate for the day through commission agent(s) whose services may be hired by the TCP through open tender.
The ECC considered and approved a proposal of the Ministry of National Food Security & Research for payment of Rs1.4 million to the transportation company M/s Mercedes Cargo Services on account of supply of wheat to Afghanistan. The proposal had been submitted in the wake of a court judgment in the matter. On a proposal from the Privatization Commission, the ECC approved grant of two months salaries to Pakistan Steel Mills employees.