ISLAMABAD: Pakistan may seek a 15-year liquefied natural gas (LNG)
contract with Qatar on a G2G (government to government) basis, on two
cargoes in a month with a reopening price clause after 11 years, during
the forthcoming visit of Prime Minister Shehbaz Sharif, an official
government.
The Premier is expected to make visit to Qatar tentatively from August
23-24, but these are yet to be finalized, the official said.
In addition, there is a proposal to sell out two RLNG-based power
plants, Haveli Bahadur Shah and Balloki. The 1,223 MW Balloki
combined-cycle gas-fired power plant bridges the energy shortfall in
Pakistan by being one of the most efficient power plants globally. The
plant has over 61 per cent efficiency. The plant entered commercial
operations in July 2018 and generates the equivalent power needed to
supply more than six million Pakistani homes.
Pakistan was also likely to offload PIA shares to hand over the
management of the national flag carrier either to Qatar or the UAE on a
G2G basis. Apart from it, the Islamabad airport was also proposed to be
handed over to any of the two countries. “PIA has been running into huge
losses for a long time and it will be sane to hand over its management to
either Qatar or the UAE. And the Islamabad airport is also not running
efficiently,” the official said.
The 1,230 MW combined-cycle Haveli Bahadur Shah project is the most
efficient power plant in the world with an unprecedented efficiency of
62.44% on RLNG fuel. This high efficiency directly translates into huge
savings for the national exchequer through fuel cost savings and will
provide cheap electricity to people and industry. Apparently, the prices of
both stand at $2 billion, but this transaction may not be feasible as
Pakistan has the equity of $450 million in both projects, which can be
sold out either to the UAE or Qatar with loans that the government
acquired for the projects.
As far as the liabilities are concerned, buyers may not own them as these
are created by the Pakistani management. So if both are sold out for
$450 million, people and opposition parties will start criticising the
decision. So these transactions may not occur.
Meanwhile, the Nepra also discounted the returns of both the plants to
12 per cent in dollar terms owing to which these may not be attractive to
potential buyers. However, there are chances that the top functionaries
will take up the sale of both the projects with the authorities of the UAE
and Qatar too. Under the proposal, the buyers will be responsible to
provide LNG to both the power plants, but they will have to pay for
using the infrastructure of LNG terminals and pipelines.
Coming to the new LNG deal with Qatar, the official said this would be
a third GtG LNG supply agreement with Qatar if Doha agreed to make
the deal done at a time when LNG had become a rare commodity and all
LNG producing countries and LNG trading companies were over-
committed with European countries for the supply of the product till
2024 on account of the Russian invasion of Ukraine. The official said
Qatar might offer an LNG deal to Pakistan from 2025 to 26.
Pakistan first inked a 15-year LNG deal with Qatar in February 2016 at
13.37 per cent of the Brent with a reopening clause after 11 years. Then
it signed on February 26, 2021, a 10-year LNG deal with Qatar at 10.2
per cent of the Brent with a reopening clause after five years. Likewise,
the country’s 100 per cent owned Pakistan LNG Limited in 2017 also
inked two term-agreements with LNG trading companies ENI and
GUNVOR. Currently, Pakistan is getting six cargoes per month from
Qatar at 13.37 per cent of the Brent, two cargoes under 10.2 per cent of
the Brent under GtG deals and is also getting one cargo every month at
12.14% of the Brent from ENI. The ENI is bound to provide to the
Pakistan LNG Limited a total of 180 cargoes in 15 years at the PGPL
terminal moored in Port Qasim. The PLL had also signed in 2017 a
five-year term agreement with the GUNVOR at the price of 11.62 per
cent of the Brent. The term agreement with the GUNVOR ended in July
2017.
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