LAHORE: Prime Minister Shahid Khaqan Abbasi on Tuesday said that the country’s second LNG terminal will be commissioned by Nov 15.
Talking to Dawn, Mr Abbasi said that if anyone, whether a client or contractor, claims for damages on the basis of delay in the project, they will have to prove the consequential loss.
“Two or three weeks ago, we visited the site and witnessed a lot of work done already,” the premier said. “During the visit, the contractor told us to complete the project till Nov 1 or 15.”
The terminal, which was earlier scheduled to be completed by June, has been hit by delays and its commissioning has been moved forward from June to August, then again to September. Now it has been reportedly planned to be functional by November 28th after a delay of six months as per the contractors request sent to client Pakistan LNG Terminal Limited (PLTL)—a subsidiary of the petroleum division. Further delays in the project could cause gas loadshedding in Punjab in the coming winter months.
“I am sure that the project completion will not be prolonged to December” the PM told Dawn. “It must be completed till November 15.” Talking about the issue of $50 million penalty imposed on the contractor the PM seemed to suggest that penalties are not the way forward. “For this we will have to go through the contract in detail. But I don’t think this penalty is justified because the delay is from both sides,” he opined. Such penalties are always imposed on the basis of consequential damages. And those claiming such consequential damages from anyone are required to prove the loss they faced due to negligence / delay on the part of other party. “So if you are not in a position to prove your loss due to negligence of anyone, you cannot claim damages,” he added.
In this particular case, Mr Abbasi said, the Sui Northern Gas Pipelines Limited (SNGPL) was not in position to off-take the LNG in June or so because of less demand. “But now they (the SNGPL) through PLTL can claim damages from the contractor because of increasing demand. But for this even, it will have to prove consequential damages first. Under this, the company will have to establish that failure of the contractor in completing the terminal led to failure of the client to meet the gas demand,” he explained. Therefore, it would have to go through the contract in depth to prove the claim, the PM concluded.
The state-owned PLTL has imposed a $50m penalty on Pakistan GasPort Consortium Ltd, which is the contractor for the LNG terminal coming up at Port Qasim, for delays in the commissioning of the plant. PGPC claims the delays are due to government failure to complete the pipeline to carry the gas, as well as a host of other reasons. The dispute hit the news recently when sources in PLTL told Dawn that they were under pressure from the government to withdraw the penalty.
Published in Dawn, September 27th, 2017