CCoE rejects LNG terminal closure

Published June 19, 2021
Power Division put on record that curtailment or non-supply of RLNG to power plants, owing to dry-docking, shall further aggravate the electricity loadshedding. — Reuters/File
Power Division put on record that curtailment or non-supply of RLNG to power plants, owing to dry-docking, shall further aggravate the electricity loadshedding. — Reuters/File

ISLAMABAD: A special meeting of the Cabinet Committee on Energy (CCoE) on Friday took a strong exception to and outrightly rejected proposed emergent withdrawal of Engro’s Liquefied Natural Gas (LNG) Terminal for dry-docking that could have almost stopped for a week its LNG supply to entire supply chain — from thousands of megawatts of power plants to hundreds of industrial units and transport sector.

The single-point meeting on — Dry-docking of Floating Storage and Regasification Unit (FSRU) of Engro Elengy Terminal Pvt and Load Management Plan — rejected the summary of the Petroleum Division. The proposed withdrawal on June 28 was considered a jolt to the country’s nascent economic recovery and hence unacceptable.

Railways Minister Azam Khan Swati, Finance Minister Shaukat Tarin and Maritime Affairs Minister Ali Zaidi strongly criticised not only Engro for what some of them called ‘blackmailing’ but also the Petroleum Division and the Power Division for being lenient in taking action under the law and instead bringing summaries to facilitate a private company at the cost of the country’s economic growth.

Power Division put on record that curtailment or non-supply of RLNG to power plants, owing to dry-docking, shall further aggravate the electricity loadshedding and will enhance consumption of furnace oil and diesel in power plants. Some ministers viewed it a conspiracy to discredit the political government for mismanagement in the peak of summers.

Dry-docking of Engro’s FSRU will disrupt entire supply chain

Minister for Planning and Development Asad Umar who leads the CCoE as chairman was equally flabbergasted over the situation. A senior power ministry official said Minister for Industries and Production Makhdoom Khusro Bakhtyar was the only silent participant as SAPM Tabish Gauhar and Secretary Petroleum Dr Arshad Mahmood faced the brunt of strong criticism from senior cabinet members.

The meeting was informed that LNG supplies from Engro’s terminal would come to a halt for a couple of days and then gradually revive but the decline in gas companies’ linepack would make redundant almost half of the country’s industry and most of the gas based power plants and entire CNG stations and some fertiliser plants. The dry-docking of FSRU has to remain in place for almost three months and was to be replaced by another “Replacement FSRU” but this period of replacement was to take place about 7-10 days.

While winding up the meeting after hearing all sorts of arguments, Mr Umar concluded that dry-docking of FSRU was due more than a year ago and the delay was caused by Engro for reasons of its own and outside the domain of the Government of Pakistan or any of its entities.

“The government or its entities had no role in delaying the dry-docking. It was purely for Engro’s own reasons,” he said, adding the country could not afford to close down industry and power plants for a single day, what to talk of 6-7 days, at a critical stage when the economic activity had just started an upward journey.

The country’s large-scale manufacturing posted 68pc growth last month on top of about 10pc growth in first nine months while the GDP has just been celebrated at a growth rate of 4pc from 0.4pc contraction last year.

“We have also been working during Covid-19 and so had been the entire country which led to economic growth despite all the challenges”, the minister said when a participant said the Engro had delayed dry-docking twice due to Covid-19. “We cannot allow closure of industries at this stage. Why should SSGCL or SNGPL suffer for the fault of Engro”, he said as majority of the CCoE members agreed in unison.

The law ministry opined that dry-docking was due a year ago, a notice of should have originated 4-5 months ago and even this new schedule would not cause any fatal blow to FSRU. It was also pointed out that dry-docking was required by one of the 12 Society Associations (of FSRU insurers) and 11 others avenues were available.

The Petroleum Division in its summary said “the re-gasification services will remain shut for two complete days whereas for the remaining five days, re-gasification would be gradually restored up to approximately 92pc of average capacity of 600 mmcfd on July 5”. It said the gas supply requirement of K-Electric’s 900MW power plant could be catered through allocation of 75mmcfd from the available stock.

Published in Dawn, June 19th, 2021

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