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HERE’S a suggestion for the petroleum minister: maybe his ministry should offer guided tours of the LNG import terminal that he claims his government built in “record time”. First the claim itself: the terminal was built by a private sector company, not exactly by his government. Second, it wasn’t exactly built in the traditional sense of the word either. It was retrofitted from an LPG import terminal, which is why the job was completed faster than it would take to build this infrastructure from scratch.
But having built the terminal, the obvious question to ask is what happens next? Since it was commissioned, only two LNG cargoes have arrived there, with no sign of the third on the horizon. So what was the purpose of building the terminal?
Why aren’t any cargoes arriving? Well, there the answer gets a little more complex, although there’s a very simple version available too. The simple version gets under the minister’s skin, as he made clear in his last news conference and a couple of newspaper articles, using various pejoratives to describe those who were writing critically about his track record.
So if we’re not allowed to say anything critical about his track record, can we please be allowed to ask a few simple questions? Here is a sample: when did the last consignment of gas arrive at the terminal? Why have there been no further consignments since then? Who in this ‘unbundled’ scheme is responsible for placing orders for the imported gas? Who is responsible for making the payment? At what price will the gas be sold to all the various categories of gas consumers? How many buyers are there for imported gas in Pakistan?
Thus far, the news leaking out of the hectic deliberations under way within the petroleum ministry don’t inspire much confidence. What the news coming out shows is a muddling through of epic proportions to determine answers to the most basic questions.
If the government tries to invoke the LNG terminal as a big success, then it could raise a couple of embarrassing questions.
I remember back in sophomore year in college we used to leave important assignments till the last minute, then run around in a panic trying to finish it up as the deadline loomed. I’ll bet it’s a little like that on the third floor of A block these days.
Muddling through is a national past time. I’ve seen it at play in many private-sector organisations as well, particularly those where it is a tradition for management to micromanage the organisation. People are afraid to raise questions, to make decisions, to share apprehensions in environments such as these.
Those who are skilled at massaging egos or telling the boss what he wants to hear are rewarded. Those who can see where things are likely to go wrong are weeded out. In time, the entire organisation comes to be staffed with men who have all the vision of a gnat, and the spine of a weasel. In such an organisation, office politics trumps results and factionalism amongst the employees is highly developed.
I don’t know what it’s like to work in A block these days, and I don’t intend to find out either. But if we are to assess the job done by an organisation based on the results coming out of it, then it seems there’s more air and less gas being arranged in A block.
With budget time looming, one silver lining for the officialdom behind this mess is that the spotlight is about to shift, even if for a brief period. If the government tries to invoke the LNG terminal as some sort of a big success of its track record, then it could raise a couple of embarrassing questions. The thing to note is that building a terminal is a means to an end, not the end itself. If the terminal was the whole purpose of the exercise, then we might as well start arranging recreational visits there, with restaurants and boat rides in the channel.
There was an innocent time, not that long ago, when the ministry proudly held a news conference with owners of CNG stations announcing the creation of what they called a “special purpose vehicle” that would arrange imports of LNG for the sector. The key question in the whole arrangement was never addressed: what price will this imported gas be sold at?
Now it’s being reported that the arrangement is not working. Clearly, not enough homework went into figuring out how to make such an arrangement work if we are almost two months past the date of commissioning and no orders have been placed under it.
Likewise with power plants and fertiliser plants. There appears to be very little enthusiasm for imported LNG amongst gas stakeholders in Pakistan, and the primary reason is price. And price is one area that the minister petroleum is least clear on. He has given some numbers at a news conference, but further reports are saying the real prices will be far higher.
It’s looking more likely with each passing day that the whole mess will devolve into some sort of a legal challenge that could snag the whole thing further. We’ve already heard reports of strong-arm tactics being used to force an agreement between various companies belonging to the petroleum ministry on import mechanism and payment. But that sort of thing cannot happen with private-sector companies, and soon the limits of what can be achieved with muddling through and strong-arm tactics will be revealed.
This is no way to run things. It’s as simple as that. This is no way to manage the oil and gas supply chain of the country. It would be a travesty if we were to discover that through all this, some sort of payment obligations to the private terminal operator also need to be settled, because the costs of muddling through would then be racked up on a daily basis. Somebody needs to admit that they screwed up, and they better do it soon.
The writer is a member of staff.
Twitter: @khurramhusain
Published in Dawn, May 21st, 2015
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