Allocation of existing pipeline capacity: Move to create monopoly of two private LNG terminals gets scuttled

ISLAMABAD: The move by the Maritime Affairs Division (MAD) for creating a monopoly of two private LNG terminals, which are not yet visible on the ground, on the existing pipeline capacity has got scuttled as a sub-committee on the issue, headed by Asad Umar, has clearly opposed the move, saying the concessions proposed to the original terms of the provisional LoI (Letter of Intent) and project guidelines are meant to favoring the two companies, Tabeer and Energas that could leave other players in the market high and dry.

“The concessions granted by the Port Qasim Authority would benefit Energas and Tabeer and, therefore, it would dihonour the judgment of the Supreme Court, passed against the JJVL case,” unfolded the official documents, containing the analysis and conclusions of the seven-member subcommittee. The conclusions of the subcommittee would be presented in the next meeting of the Cabinet Committee on Energy (CCoE). The sub-committee, comprising Minister for Power, Minister for Maritime Affairs, Special Assistant to the PM on Petroleum, Special Assistant to the PM on Power, Secretary Petroleum Division and Secretary Ministry of Maritime Affairs, was constituted by the CCoE, met on January 18, 2021 to deliberate on the issues regarding allocation of the pipeline capacity to new terminals and formulate recommendation for consideration of the CCoE.

According to the document, the sub-committee said the multiple extensions granted to the companies to execute the final LoI and Implementation Agreement (IA), are also in violation of the public procurement laws. “On this ground, the Supreme Court had cancelled the 4-GAS/SSGC LNG Project, and would likely to do so again if any one consulted the court.” On the face of it, the document said the concessions granted by the Port Qasim Authority (PQA), are against the spirit of the public procurement laws and in violation of the JJVL judgment, private parties could not be benefited in such a way. The sub-committee members also reviewed the proposal of the Maritime Affairs Division in detail, along with the correspondence between the PQA and the prospective LNG terminal developers.

The Port Qasim Authority wanted the government to utilise additional expanded capacity for import till new terminals are online and existing pipeline capacity might be given to these developers and new developers might be invited to lay additional 17 km pipeline as per precedent of the Engro Elengy Terminal Pvt Ltd (EETPL), and for level-playing field, similar conditions as those in the LoI might be imposed on the existing developers.

The Petroleum Division in the CCoE meeting, held on January 18, 2021, had strongly opposed the proposal of Maritime Affairs Division for allocating the existing capacity in gas pipeline to the upcoming two new LNG terminals at Port Qasim, saying the capacity allocation should be given on the ‘first come first serve’ basis based on third party access rules.

The Petroleum Division was also of the view in January 18, CCoE meeting, that it would create a monopoly of upcoming LNG terminals planned by Energas Terminal Pvt Ltd and Tabeer Energy Pvt Ltd and and it would deprive other parties.