ABDUL RASHEED AZAD
ISLAMABAD: The second LNG cargo ship from Qatar is due to dock at EPTL’s LNG terminal on April 21 with the government still claiming that it has not yet signed a firm deal with Doha.
The Minister for Petroleum and Natural Resources Shahid Khaqan Abbassi persists in claiming that the deal is not yet signed on that Pakistan State Oil (PSO), under the administrative control of the Ministry of Petroleum, is merely facilitating LNG imports from Qatar by opening letters of credit which are financed by the private sector particularly the fertilizer sector and CNG stations and that Sui Southern and Sui Northern pipelines are being used for delivery from the port.
Reports indicate that LNG is being transported from Qatar to EPTL through Floating Storage and Re-gasification Unit (FSRU) which is scheduled to dock with the second shipment on Tuesday. A Universal Gas Company (UGC) formed by All Pakistan CNG Association (APCNGA) signed a term-sheet with PSO for this second shipment destined for Punjab CNG stations closed since November 15, 2014.
This was confirmed by APCNGA Supreme Council Chairman Ghayas Abdulllah Paracha who told Business Recorder that UGC has already paid PSO for import of LNG. He said CNG would continue to be 30 per cent more cost-effective than petrol in terms of mileage and added that CNG sector was paying $11.10 per mmbtu for using local gas and government has announced the imposition of a 5 percent General Sales Tax (GST) on imported LNG for CNG sector.
According to Shahid Khaqan Abbasi, Pakistan will purchase LNG at 13.5 percent of Brent oil prices. The first consignment of 3,200 Million Cubic Feet (MMCF) was purchased at $8.5 per Million British Thermal Unit (MMBTU) and supplied to a fertilizer company at $12 per MMBTU.
The final LNG price includes transportation charges from Qatar to Port Qasim Authority (PQA), port charges which as yet are not decided but PQA is demanding $1.2 million per ship, terminal charges which are associated with the quantity of the commodity (if daily 400 Million Cubic Feet per day (MMCFD) of LNG is re-gasified at the terminal it will cost $0.63 per unit and if 200 MMCFD is re-gasified terminal charges will go up to $1.4), Pakistan State Oil (PSO) margins, transportation charges of gas utilities and imposition of GST @ 17% excluding CNG sector.
The cost of the imported commodity will start declining with increasing volume of imports. EPTL’s terminal will handle a maximum 700 MMCFD by the end of November. As per contract the EPTL will provide a maximum 400 MMCFD of LNG to the government.
The official said that LNG was costing the end consumers $11 per MMBTU, adding that Independent Power Producers (IPPs) during a high-level meeting held on April 14, 2015 at Ministry of Water and Power had agreed to purchase it at $14 per mmbtu as High Speed Diesel (HSD) costs them a $24.
Secretary Ministry of Water and Power has also asked the Petroleum Ministry high-ups to immediately provide the Ministry with a timeframe for importing LNG so that the Ministry can collect the required amounts from the IPPs for LNG imports, otherwise, the Ministry will allow the IPPs to operate on HSD till August.
