The fate of multibillion dollars Pakistan Mashal LNG Project (PMLP) is in doldrums as Law Ministry has again opposed the award of the contract to the Dutch firm '4Gas', and recommended inviting fresh bids for the deal, Business Recorder has learnt. '4Gas' has already threatened to walk out of the project if the government does not decide by November 30, 2010).
'4 Gas' submitted integrated offer (Terminal tariff plus LNG price) on May 17, 2010 and is still awaiting government's decision. Earlier, Petroleum Ministry had 'inadvertently' sent only one summary to the Law Ministry regarding Vitol/Fauji Foundation LNG import project proposal. "This prompted the Law Ministry to suggest that fresh tendering for PMLP should be held."
"Petroleum Ministry sent a fresh summary to Law Ministry in line with the direction of Economic Co-ordination Committee (ECC) of the Cabinet to comply with the orders of the Supreme Court," sources said, adding that Law Ministry has not changed its stance and has proposed inviting fresh bids.
'4 Gas', based in the Netherlands, submitted commitments from Carlyle/ Riverstone and AtlasInvest, '4Gas' main shareholders, US government's Overseas Private Investment Corporation (OPIC) as credit provider, International Financial Corporation (IFC) a World Bank subsidiary as 12.5 percent equity partner and GDF Suez as LNG supplier. After receiving report from '4 Gas', the Ministry of Petroleum issued a Letter of Comfort (LoC).
OPIC and IFC have committed to provide $370 million financing for setting up a terminal at Port Qasim for LNG import. '4 Gas' management has estimated an investment of over $600 million to complete the two phases of the terminal under PMLP.
According to the working, the delay in decision on Mashal LNG project is costing Pakistan $50 million per month on account of price difference between electricity produced from furnace oil and gas. Experts are of the view that prices of LNG in international market stand currently at lower level and, therefore, the government should provide level playing field for LNG import deals.
The Ministry of Petroleum is divided over the issue: one group recommends awarding the multibillion dollars contract to '4 Gas' and French company 'GDF', because it believes that fresh tendering of the project would take a long time, which would lead to more energy crisis due to non-availability of gas; whereas another group suggests fresh tendering of the project to facilitate the LPG group that has recently procured the necessary licence for setting up LNG terminal, and wants contract of PMLP by scrapping proposed deal with '4 Gas'.
Comments
Comments are closed.