Pakistan State Oil (PSO) has asked National Transmission and Despatch Company (NTDC) to pay Rs 12.12 billion in advance for import of four cargoes of Liquefied National Gas (LNG) on spot rates from November 2015 to be supplied to the power sector, well-informed sources told Business Recorder.
PSO, sources revealed, imported 13 LNG cargoes on spot purchase until November 2015 after commissioning of LNG terminal at Port Qasim in March 2015.
With import of four more LNG cargoes from November, total number of cargos will reach 17. If the price of new cargoes is taken as a benchmark, the total approximate cost of 17 cargoes will be around Rs 50 billion.
According to sources, a high level meeting presided over by the Prime Minister Nawaz Sharif decided that NTDC will pay the price of RLNG in advance to PSO.
Ministry of Water and Power, sources said, is unhappy with the Ministry of Petroleum and Natural Resources for not lowering the price of RLNG vis-à-vis furnace oil as RLNG has already been declared fuel purportedly to stave off controversy.
Power plants running on RLNG at the cost of $12.80 per MMBTU are more costly if compared to the plants running on furnace oil as fuel and this is the key concern of NTDC and IPPs.
On Saturday, the spot purchase price of crude oil was $2/barrel and on the basis of the 13.39 of Brent, the price of LNG should be just $4.28/ MMBTU, which implies the total cost of RLNG should not exceed $8 per MMBTU even after inclusion of charges and taxes.
The three public sector companies – Pakistan State Oil, Sui Southern Gas Company and Sui Northern Gas Pipelines Limited – have sought a cumulative 32.3 per cent increase in the price of RLNG to improve their profits on existing system losses without fresh investments.
Some businessmen have apprised Chief Minister Punjab Mian Shahbaz Sharif that spot is the way to go and not the one-sided deal that Qatar has been offering since Musharraf days.
“Even if it’s a five year contract, there has to be a price re-opener every five years,” said one of the energy sector analysts.
PSO and Qatargas have not inked 15 year RLNG agreement so far due to differences on price as two other companies ie M/s Gunvor and M/s Shell have offered lower price compared to Qatar for a contract of five years.
Ministry of Petroleum and Natural Resources submitted a summary to the ECC on November 20, 2015 for approval of LNG Supply Purchase Agreement (SPA) with the recommendation that PSO as buyer may be allowed to execute the SPA along with side letter with QG2 as seller pursuant to the G to G agreement. However, the whereabouts of the summary are not known.
A senior government official told this scribe that LNG deal apparently is not transparent which is why the concerned Ministry is not making it public and the country’s top office is aware of this state of affairs. However, Petroleum Minister, Shahid Khaqan Abbasi claims that deal with Qatar will be transparent.
National Accountability Bureau (NAB) is actively investigating LNG deal for which Petroleum Minister has already been quizzed.
Source: Business Recorder