Second LNG terminal: PLTL authorised to sign LSA with successful bidder

The Board of Directors (BoDs) of Pakistan LNG Terminals Limited (PLTL) has authorised the company to sign LNG Services Agreement (LSA) with successful bidder to set up Pakistan's second terminal with a capacity to handle 600 Million Cubic Feet per Day MMCFD) of imported LNG.
According to official sources, the Board of Directors (BoDs) of PLTL met here to consider award of contract to successful bidder. After detailed deliberation, the board authorised PLTL management to sign LNG Services agreement with the successful bidder. Sources said that after the approval of BoDs of PLTL, now the Petroleum Ministry would move a summary to Economic Co-ordination Committee (ECC) to get approval so that PLTL can sign LSA with successful bidder.
As per details Board of Directors of Pakistan LNG Terminals Limited (PLTL) in its meeting held on May 6 approved financial bid submitted by Pakistan GasPort Limited (Consortium) which includes Fauji Oil Terminal and Distribution Company Limited (FOTCO) which offered a levelized (service) charge of $0.4177 per MMBTU for handling of 600 Million Cubic Feet per Day (MMCFD) of LNG at the terminal. The project has to be implemented within 11 months at Port Qasim, Karachi.
The government plans to replace oil based power plants with imported gas for efficient use of power plants and producing clean energy. At present, country is facing 2 Billion Cubic Feet per Day (BCFD) gas shortfall due to rising demand whereas local gas production stood at level 4 BCFD for last 10 years. To address the gas shortage the government was working on gas pipeline projects including Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan (IP). According to officials the government in collaboration with China is also working to set up LNG terminals at Gwader port with a capacity to handle up to 1.2 BCFD of imported gas.
According to sources the other company Akbar Associates, which is contesting for the 2nd LNG terminal and lost the bid, has filed a case in the court. The board was informed on Tuesday that PLTL had sought legal opinion which argued that contract could be awarded to the successful bidder despite that the case was in court. According to legal opinion, court had not barred the company to award contract to successful bidder.
Keeping in view of legal opinion, board authorised the company to initial LSA with successful bidder. The four Independent Power Producers (IPPs) including Saif, Halmore, Sapphire and Orient in Punjab were not operating due to lack of strategy regarding fuel supply. However, in case of new power plants, government had formulated a strategy to provide sustainable and credible fuel supply to new power plants in a bid to minimise power outages," official said adding that second LNG terminal was part of sustainable fuel supply strategy.
He said that three LNG power plant with 1200 MW generation capacity each were being set up. Petroleum Ministry had given undertaking to Power Ministry to provide 200 mmcfd LNG to each plant. "The new LNG-based power plants are being set up which have 62 percent efficiency rate and if they are operated at average capacity of 55 percent, they would be generating over 4000 MW electricity. Official further said that past governments had allowed Independent Power Producers (IPPs) to operate on diesel and furnace oil which led to higher electricity bills.
The furnace or diesel based power plants operate at maximum45 percent generation capacity which means that they do not only generate expensive power but they produce less clean energy," official said adding that Pakistan being a signatory of Paris deal on climate to produce clean energy and these LNG based power plants would help to achieve the targets set in Paris climate deal.
Furthermore, LNG based plants would also generate cheaper energy compared to oil based plants, official maintained. Official said that government was working on three pronged strategy which include setting up LNG terminals, LNG based plants and augmenting pipeline network to transport gas. At present, existing gas pipeline network has capacity to transport 400 mmcfd gas. Gas utilities, Sui Southern Gas Company Limited (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) were already working to enhance existing pipeline capacity by laying 42-inch pipelines to gradually increase this capacity to 1,200 mmcfd.