Ministry of Petroleum and Natural Resources has reportedly withdrawn a summary from the ECC regarding borrowing of Rs 101 billion by SNGPL and SSGCL for a gas pipeline project after SBP Governor opposed borrowing from local banks. According to official documents available with Business Recorder, the ECC was informed on September 3, 2015 that the government was aggressively pursuing the import of Liquefied Natural Gas (LNG) to meet a shortfall in gas supplies as a short term measure.
Accordingly, various projects aimed at import of a total of 1200 MMCFD gas were being pursued whereas the present pipeline capacity could only handle up to 400 MMCFD gas out of which 280 MMCFD gas could be transported to M/s SNGPL system while 120 MMCFD gas could be consumed in M/s SSGC system.
Both the gas companies have embarked upon a pipeline infrastructure development plan for upcoming LNG imports and anticipated indigenous supplies. The project was expected to be completed by December, 2016 in two phases subject to timely availability of funds. The gas utilities (SNGPL and SSGCL) have arranged funds from commercial banks for undertaking of Phase-I.
However, they require funds of Rs 58 billion (SNGPL) and Rs 40 billion (SSGCL) for Phase-II. These companies requested the Ministry of Petroleum and Natural Resources to arrange the funding facility through Gas Infrastructure Development Cess (GIDC). The matter was taken up and the Ministry of Finance expressed its willingness to provide GoP guarantee in favour of the companies to arrange financing for Phase- II of the project from commercial banks.
Ministry of Petroleum and Natural Resources sought approval of the ECC for bank borrowing to the extent of Rs 101 billion in favour of M/s SNGPL and M/s SSGC enabling them to carry out augmentation of pipeline for Phase-II project as per their quarterly requirements. During ensuing discussion, Governor Sate Bank of Pakistan stated that a considerable amount of foreign exchange may be involved in procurement of materials from abroad for laying of the proposed pipelines. He therefore suggested that the option of arranging foreign exchange through commercial borrowing from abroad may be explored by the companies concerned to avoid pressure on the foreign exchange reserves of the SBP.
The Chairman ECC Senator Ishaq Dar observed that the total amount required by the companies was Rs 98 billion ie Rs 58 billion (SNGPL) and Rs 40 billion (SSGCL), whereas approval was being solicited for Rs 101 billion. The Secretary, Ministry of Petroleum and Natural Resources, clarified that an amount of Rs 3.00 billion was meant for contingencies. After a detailed discussion and keeping in view the observations of Governor SBP, the Petroleum Ministry withdrew the summary.
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