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Corrupt politicians questioning LNG imports, says minister

Updated September 18, 2015

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Khaqan Abbasi claims LNG imports would be a game-changer for Pakistan.—DawnNews screen grab/File
Khaqan Abbasi claims LNG imports would be a game-changer for Pakistan.—DawnNews screen grab/File

ISLAMABAD: Petroleum Minister Shahid Khaqan Abbasi has said that politicians who have been questioning the LNG imports are corrupt.

Defending the government plan to import LNG, he said at a news conference, his fourth on the subject in as many days, that several important leaders had hurled allegations of corruption. “Today I say these accusers themselves are corrupt. They should come forward and respond now.”

He said there could be mistakes and procedural lapses because “we are inept people, but we have done everything according to law and nobody can accuse us of corruption”.

Know more: Oil mafia tried to bribe me on LNG: minister

He said he had written two letters to heads of political parties saying that the LNG import was an issue of national importance and they should come up with a proposal if the commodity could be imported at cheaper rates and the government could benefit from such offers. There was no response, but political statements were still pouring in, he added.

Mr Abbasi said three governments, including one of martial law, over the past 10 years had made five failed attempts to import LNG, but the present government had succeeded in doing it within 20 months. This was now being consumed by the power sector, fertiliser and CNG, while industry and housing societies are not approaching the government for LNG supplies.

He said given the fact that domestic gas reserves were fast depleting and all sectors like fertiliser, electricity and transport were suffering. LNG imports, he added, would be a game-changer for Pakistan because domestic gas production stood at four billion cubic feet per day, while the demand had more than doubled.

Repeating his claim that the oil mafia had offered him big amounts as bribe and warned him against pursuing LNG imports, he said previous governments failed perhaps because of such threats and offers of bribe.

He said the PML-N government saved $400 million by running 600MW diesel-based power plants on LNG this year. These plants remained closed last year. He said $1bn could be saved annually if 1,800MW of diesel-based plants were run on LNG at full capacity and in case of furnace-oil based plants the saving would be $600m.

Moreover, he said that if three new power plants of 3,600MW to be set up by the current government were run on LNG they would generate 30bn units annually and save Rs200bn.

The minister claimed that electricity generated through LNG in Pakistan in 2017 would be cheapest in the world.

He said the price at which he had been able to import LNG was the cheapest in Asia, including Japan. Japan imports 80m tons a year against Pakistan’s 1.5m tons import and its LNG price was lower than that proposed for Iranian and Turkmenistan gas.

The minister said Kuwait used the money earned from its oil exports to generate LNG-based electricity at home, while Egypt imported LNG for power generation because of its lower cost.

Answering a question, Mr Abbasi said a long-term contract had been finalised with Qatar Gas and after its formal signing he would be available for accountability at all forums.

He said Pakistan had so far imported 11 cargoes of LNG at $7.5-7.7 per million British thermal unit through spot purchases, while Japan bought it at $8.

He said the petroleum ministry had feared teething problems at the outset and hence committed only 200mmcfd of LNG for the first year under the terminal agreement with Engro, otherwise the terminal had the capacity to process 600mmcfd.

He said that despite a number of problems, LNG imports were only half a ship behind schedule as 11 ships had been imported and 13 more would be arriving by the end of March next year.

The minister said terminal charges in Pakistan were lowest among about 40 similar terminals across the globe. The terminal contract was not changed after the bidding as was the case with many past agreements. He said additional LNG imports would make three major power plants of 3,600MW operational in summer 2017, resulting in almost no loadshedding. The plants would have the highest guaranteed efficiency of 52.5 per cent so far secured in Pakistan, he said.

Mr Abbasi said the government could secure cheaper LNG through negotiations but was constrained by procurement rules that required bidding which had peculiar problems with a product like LNG.

He said Pakistan needed over 15m tons of LNG a year, including 5m tons for three power projects. The country was importing about 1.5m tons and it would go up to 3m tons next year.

Published in Dawn, September 18th, 2015

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