ISLAMABAD: The government on Wednesday decided in principle to import about 200 million cubic feet per day (mmcfd) of additional LNG from Qatar and will constitute Price Negotiation Committee (PNC) for talks on gas sales and purchase agreement (GSPA).
The decision was taken at a meeting of the Economic Coordination Committee (ECC) of Cabinet presided over by Finance Minister Asad Umar. It was informed by the Petroleum Division that a broad-based PNC had arranged about 500mmcfd of LNG from Qatar under a 15-year contract at about 13.37pc of Brent under the previous government.
The Petroleum Division recommended that similar arrangement should be in place to negotiate final price under government-to-government basis because Pakistan needed additional quantities to fully utilise processing capacity of the two LNG terminals at cost-effective basis and meet local demand.
The ECC asked the Petroleum Division to come up with a PNC and submit a formal summary in the next meeting for approval so that the PNC could report on pricing within 15 days for formal signing of GSPA.
The decision came a day after Petroleum Minister Ghulam Sarwar Khan reported that Saudi Arabia had offered cheaper LNG rates than revised prices offered by Qatar. He said Qatar had offered lower price for additional 200mmcfd compared to the existing price while Saudi Arabia proposed even cheaper rates and Pakistan also had a memorandum of understanding with Malaysia for LNG trade. “We are under no compulsion and would go for the cheapest option.”
Informed sources said Qatar had offered about 20pc discount on previous rates for additional quantities while spot market had now plummeted to about $4.42 per mmBtu – the lowest level since April 2016. Even with 20pc discount, Qatar’s revised rate generally worked out at over $7 per mmBtu.
The ECC also discussed payment problems of Fauji Kabirwala, Rousch, Kot Addu and Altern Energy (all independent power produers) because of clearance of outstanding dues and considered proposals for payment of past dues on weekly or monthly basis. The committee directed that all current payments should continue without any hindrance and matter of weekly or monthly payment cycle for backlog be taken up at a subsequent meeting keeping in view the cash flows of the Central Power Purchasing Agency (CPPA).
A proposal of the Federal Board of Revenue was approved that will waive the accumulated penal surcharges of Rs700 million against overstayed consignments at ports provided they lift their consignments within 15 days after payment or normal taxes and duties. The decision will enable importers to clear their overstayed cargoes and would also help reducing congestion at ports and bonded warehouses besides generating.
Maritime Affairs Division briefed ECC about the progress on new LNG Terminal. The finance minister directed the division to expedite the process for establishment of new LNG terminal in consultation with interested parties and other stakeholders in view of rising gas demand in the country.
Earlier this month, the ECC had ordered a scientific examination of all feasible locations for allowing setting up of additional LNG import and processing terminals including the possibility of expansion and dredging of the main channel to overcome traffic congestion.
On the issue of the submission of Pakistan Steel Mills’ revival business plan, ECC directed the Ministry of Industries and Production to submit its proposals within the next fortnight. An advisory committee of Hubco group on PSM revival plan was given a second deadline about two months ago to complete its work but was missed reportedly because of engagements of group leader Khalid Mansoor abroad.
The committee also accorded approval to the proposal of National Counter Terrorism Authority by granting it technical supplementary grant of Rs133.156m.
Insurance sector
The insurance sector also came under discussion in the meeting as the commerce ministry had forwarded a summary for the establishment of an independent regulator for it.
The commerce ministry had maintained that the Securities and Exchange Commission of Pakistan (SECP) had failed to ensure the sector’s growth.
However, SECP Chairman Farrukh Sabzwari told ECC that insurance sector has failed to improve owing to multiple factors as the main life and non-life insurance companies were still in the public sector.
He suggested coordinated measures with the support of government functionaries as there was a need to change the overall functioning of insurance.
Sabzwari told the committee that there were pockets not addressed by the government for past several years and no new product with mass appeal had been launched by insurance companies.
The ECC has agreed for a time period of six months to improve the sector’s performance across the country.
