Minister for Petroleum Shahid Khaqan Abbasi has maintained the LNG import price from Qatar under long-term contract would be below $7 per MMBTU, adding that the government would have to pay daily terminal charges of $272,000 even if it does not import LNG. While briefing the Senate Standing Committee on Petroleum and Natural Resources chaired by Senator Israrullah Zehri, Khaqan Abbasi said 2000 MW most efficient power plants are idle because of non-availability of gas and LNG could be the only solution to produce alternate of the local gas.
The price of four cargoes was $7.5 per MMBTU; and the last cargo was procured at $7.7 per MMBTU by the private sector. He assured the committee the price negotiated by the government would be the lowest. He further stated that LNG import contract with Qatar government is ready for signing. He added soon after its signing it would be brought before the Parliament and price would be approved by the Economic Co-ordination Committee (ECC) before making it public. He said that the contract would be placed on the website soon after its signing. He said LNG contract with Qatar government would be the lowest in the world and gas would be comparable to Iran's and Turkmenistan's.
He said the government would be happy if IPPs decide to import LNG as was being imported by the fertiliser and CNG sectors. He said the government would start importing LNG for power sector only when letters of credit are provided by the IPPs. The government would also be producing 3600 MW electricity from LNG based power plants, which would save $2 billion annually.
Abbasi also informed the committee that switching 2000 MW power plants to LNG instead of running them on diesel would save Rs 60 to Rs 100 billion annually. LNG-based power plants are 45 per cent efficient as compared to 30 per cent efficiency of diesel-based plants. The Minister said that LNG re-gasification terminal was built by the private sector within a record time of 11 months and the first shipment reached the terminal on March 26 2015. The meeting was informed that average tolling fee was 66 cent per MMBTU, which minister claimed was lowest in the world. He said that the government would be paying per day $272000 terminal fee if private sector or government does not import LNG. He said that $90 to $100 million would be required to pay terminal fee annually and payment is made against monthly invoices.
The committee was further informed that LNG contracts are not done through tendering because this commodity is first sold and then produced. The government would be importing 3 million tons of LNG in three years against the country's requirement of 15 million tons. The country required to have signed five more contracts of same quantity to meet the domestic demand. The Minister admitted that import of LNG was one ship less than the target during the first six months as 11 ships against the target of 12 could be imported. He said Ogra's role is to work out a mechanism for fixation of LNG price.
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