ISLAMABAD: The federal cabinet on Wednesday directed the petroleum and defence ministries to remove all hurdles within 30 days to facilitate setting up and operationalisation of two additional liquefied natural gas (LNG) processing terminals in the private sector.

Under the decision taken at a cabinet meeting on Tuesday, the prime minister approved two proposals of the Ministry of Maritime Affairs and ordered immediate implementation.

Special Assistant on Pet­ro­leum Nadeem Babar confirmed that the cabinet removed all obstacles. He said the two additional terminals required a total of 16 approvals and no objection certificates and 14 were already in place. The final two approvals have been cleared by the cabinet, he added.

Informed sources said the cabinet ordered the Ministry of Defence to issue “NOC within thirty days for the establishment of two new LNG terminals at Port Qasim, Karachi” as precedents were available on record.

Likewise, the Petroleum Division was directed to undertake and commit to the new terminal operators — Energas Terminal and Tabeer Energy — for allocation of LNG gas in the existing pipeline ‘on first-come first-serve basis’ and providing capacity to both the terminal operators in new planned gas pipeline within 30 days, so that formalities could be completed by the terminal operators.

The sources said the Ministry of Defence had on Feb 19 “assured the LNG terminal operators that NOCs would be granted upon submission of relevant documents”. However, on June 4, the ministry conveyed that “Pakistan Navy had certain observations with respect to security of the project and was hesitant to grant NOCs despite the fact that NOCs for the existing two LNG terminals were issued by Ministry of Defence” between April 2012 and June 2014.

It was also found on record that Maritime Affairs Wing of the Ministry of Defence had regretted NOC to Energas Terminal at Port Qasim in Oct 2018 but had issued an NOC to Pakistan Gasport in Dec 2018. Therefore, the security concerns appeared to be selective.

Pakistan Navy had in July this year expressed concern that in the aftermath of enemy attack on oil installation in Karachi in 1971 had resulted in heavy fire and collateral damage, hence the defence cabinet committee later imposed ban on oil storages in port areas in 1984 and gave Pakistan Navy the lead role in clearing proposals of energy projects there.

The cabinet was informed that the ECC and the cabinet had in various meetings in 2019 decided that all five interested companies be allowed to participate in the bidding process for the establishment of new LNG terminals, at Port Qasim under which the port authority granted five letter of intents.

Subsequently, two terminals operators M/s Energas Terminal (Pvt) Ltd and Ms Tabeer Energy (Pvt) Ltd accepted the terms and conditions and deposited $2 million as part of concession fee each (out of total $10m concession fee each) and remaining $8m to be deposited upon signing of implementation agreement.

Published in Dawn, September 10th, 2020