LNG terminal at PQA

Three back-to-back stories- "Construction of LPG terminal: OGRA twists rules to grant license" (January 4), "License for LNG terminal at PQA: PGL provided misleading information to OGRA" (January 5), and "No gas from new fields likely: USAID told" (January 6) published in your newspaper about the Pakistan GasPort Limited LNG Project. We wish to clarify and inform you as follows:
1. Pakistan GasPort Limited's Liquefied Natural Gas (LNG) import project at Port Qasim, Karachi, is a private sector initiative. It will help Pakistan meet its urgent and immediate natural gas requirements. The PGP Project is in complete compliance with the LNG Policy 2006 and the LNG Rules 2007.
2. The PGP project is neither a "monopoly," as spuriously claimed by the reporter nor has it sought or received any commitments or concessions in any shape or form from the Government. The PGP project does not involve any funding from the national exchequer.
3. The PGP Project is similar to the one situated in Dubai, UAE, and Teeside, UK. PGP's private sector project will be importing LNG, regasifying it offshore, relaying it onshore through a 5.5km subsea pipeline, and providing it to other private sector gas consumers, including power plants.
4. This private sector project being implemented at PGP's own risks and costs. The company, which is registered under the Companies Ordinance, 1984, has not sought and shall not be seeking any buy-back, throughput or financial guarantees from the Government whatsoever.
5. PGP will be offering natural gas to buyers at prices cheaper than the prices of furnace oil. Natural gas is a clean fuel and the switch from furnace oil to natural gas will be beneficial for the environment and profitable for industry.
6. The reporter claims that the Oil and Gas Regulatory Authority (OGRA) "has reportedly manipulated rules and regulations" to grant a license to PGP. We take strong exception to this false and untrue allegation offered for the purposes of attempting to scuttle this nationally-important project and maligning its sponsors. PGP is and shall remain in complete compliance with all applicable rules, international safety standards and best practices, and the law. It is reiterated that the project is in faithful compliance with the LNG Policy 2006 and the LNG Rules 2007.
7. The January 4 story refers to Article 3.1 (b) of the LNG Policy 2006 which asks LNG project developers to "demonstrate access to sufficient natural gas reserves (in the form of a Heads of Agreement (HOA) with an LNG supplier) to supply LNG at the required import volumes for a minimum period of 20 years." However, in accordance with the Government decision of October 1, 2009, this clause is "not applicable to any private sector project" where the Government and state-owned companies have no financial exposure or risk.
8. The project does not have an LPG component. 9. PGP has arrangements in place with LNG suppliers and access to an FSRU (Floating Storage Regasification Unit). PGP is investing in and developing this critically-needed project on the basis of these arrangements. Some 85 percent of the project cost is being funded by foreign investors and lenders. It is the exclusive prerogative and right of these parties to undertake due diligence on the financial and technical aspects of the project including availability and disposal of gas. The reporter's disingenuous concern about the viability of the project for its sponsors is unfounded and unwarranted.
10. The PGP project received clearance on July 4, 2009, from the Environment Protection Agency of the Government of Sindh after public hearings on its Environmental Impact Assessment (EIA) report. The project is in compliance with the Pakistan Environmental Protection Act, 1997. OGRA issued PGP a conditional license for construction on October 5, 2010.
11. We take strong exception to the claim in the January 5 story that PGP "has reportedly provided misleading information" to OGRA because its application refers to Associated Group and not PGP. This is another devious argument considering that his stories refer, correctly, to PGP as the Project development company.
12. The LNG Policy 2006 allows third parties access to the pipeline capacities available with Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited subject to payment of a tolling charge. Article 6.4 of the LNG Policy 2006 states: "OGRA will ensure that subject to capacity being available, the LNG Developer or LNG Buyer or RLNG Buyer, as the case may be, will have access to the SSGC and SNGPL pipeline network at a regulated cost plus tariff even after privatisation of these two entities. If SSGC/SNGPL do not have available capacity, the LNG Developer or LNG Buyer or RLNG Buyer, as the case may be, can request SSGC/SNGPL to expand capacity or may construct its own pipeline." Therefore, the claim that the PGP project will "jeopardize" SSGC's Mashal LNG Project is baffling. If the national gas grid is utilised, it will guarantee additional income stream for the relevant gas utility company.
13. The claim that PGP's Project is "totally dependent on [SSGC and SNGPL] infrastructure" is ignorant and fictive. This claim is also surprising given that the reporter allays his own concerns by stating: "Obviously, Mashal as an SSGC and government of Pakistan project would have higher priority and preference, as opposed to PGL." The reporter seems to also be unaware that the LNG Policy 2006 allows for the setting up of multiple LNG import projects.
14. The January 5 story claims that PGP will be using "investments of the state." This is completely false. PQA swampland was not "allotted" to PGP "within one day of applying" for it. PGP signed an Implementation Agreement with Port Qasim Authority on May 7, 2007, subject to the payment of all applicable fees and rentals, and in compliance with all rules. No concessions or price advantages were offered to PGP. Whatever facilities PGP may avail from either PQA or any other state-owned company, PGP shall pay for provision of the same. To contend that these facilities are "investments of the state" being provided for free is ill informed and dishonest. By this specious measure, all private shipping at PQA and Karachi Port Trust requires to be stopped.
15. We strongly object to the reporter's claim that PGP must demonstrate that "the people of Pakistan will not be exploited in this project."
All responsible and respected opinion-makers of the country are urged to support the PGP project on merit and advise the Government to remove impediments in the way of its speedy implementation. It is in the country's interest to encourage competition and have LNG imports into Pakistan as soon as possible through the setting up of multiple LNG terminals."-PR