LNG: the second round

Published February 13, 2016

EVER since the government proudly declared the completion of the LNG terminal to be one of its emblematic successes, there has been a barrage of attacks against it, and the petroleum minister in particular, for failing to have made the arrangements to actually import the gas.

Almost a year after the terminal began commercial operations, we finally have a signature on a long-term supply contract for LNG, at a price that is lower than what most other customers are paying.

In the meantime, it has been a story of epic muddling through as the embattled minister tried to bulldoze his will through a reluctant and lethargic bureaucracy to make the arrangements for importing the fuel that he claimed would change the destiny of the country.

Makeshift arrangements were resorted to, in the meantime, as the minister attempted to get the bureaucracy to furnish the approvals he needed. Along the way, LNG was controversially declared to be a petroleum product to get around messy provincial government claims on natural gas.

But now the deal is finally done and we can be reasonably sure that regular deliveries are about to begin a full one year after the commencement of commercial operations.

It may not make for a story of tight management, but the minister has delivered and the country is one step closer to achieving a truly historic landmark as it prepares to receive the first of its regular supplies of imported gas.

This is his moment and it would be unfair to try to tarnish the scale of what has been accomplished, or to place hurdles in the way.

So despite all the attacks that his performance was subjected to throughout the year, and despite the delays, it is time to give credit where it is due.

Now comes the difficult part. How to transfer the gas which lands at Port Qasim in Karachi to its consumers in southern Punjab?

It turns out that here too the homework has not been done, and from the looks of it, we are now in for round two of muddling through our way to getting a workable LNG import scheme up and running.

Transferring the gas from the port to upcountry consumers can either be done through a dedicated pipeline, or through the SSGC network.

In the former case, the price tag is large and the gestation period long. The latter option activates provincial claims all over again.

Funding for the dedicated pipeline has not been arranged, and the controversial proposal to shift the cost onto consumers through a cess is likely to land the government in a new set of squabbles all over again. How hard the Sindh government presses its claims to the imported gas remains to be seen.

Let’s hope round two is shorter and a lot less painful than the first round.

Published in Dawn, February 13th, 2016

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