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The Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi had consistently maintained that commercial LNG deals are always undertaken in strict secrecy, as they are highly sensitive. This was the rationale he provided for his refusal to take the country into confidence with the more than two-and-a-half-year-long negotiations with Qatar. Once the deal was signed, he had vowed that the price and details would be uploaded on the website for all to see. That unfortunately has yet to happen nearly two months after the deal was signed in Doha on 10th February this year, amidst much fanfare with Prime Minister Nawaz Sharif also in attendance. Business Recorder has been keeping a close watch on the websites of the three relevant entities that may have uploaded the deal namely the Ministry of Petroleum and Natural Resources, Pakistan State Oil (which BR was informed a month ago would upload the deal in a day or two) and the Public Procurement Regulatory Authority (PPRA) but so far the deal has not been uploaded on any of these entities' websites. Thus all the information that is currently available to the general public is based on statements/claims made by Khaqan Abbasi.
So what has been revealed to the public so far? Pakistan has negotiated a 21 billion dollar 15-year-long contract with Qatar to supply Liquefied Natural Gas (LNG). Under the terms of the agreement Qatar will supply Pakistan with 500 million cubic feet per day (mmcfd) of LNG under a pricing formula that translates into a current price of LNG of 7 dollars per million British thermal units (mmbtu), a price lower than that paid even by Indian importers, who are currently paying close to 9-10 dollars per mmbtu. In addition, it was also revealed that the 7 dollar per mmbtu does not include transport costs. Thus gas price that would be paid by Pakistani consumers would be higher than 7 dollar per mmbtu and include the cost of chilling it down to minus 170 degrees Celsius.
Two obvious observations come to mind. First that the 7 dollar per mmbtu is 2 dollars per mmbtu more expensive that the Iranian gas under the Iran-Pakistan gas pipeline project subject to the condition that the pipeline had been fully operationalized by now which is certainly not the case. The Pakistan government consistently maintained that it would begin laying the pipeline once sanctions were lifted. Subsequent to Iran reaching a deal with the G5 plus one, Western sanctions were lifted on 16th January 2016 and it has been recently reported though unconfirmed that Iran may seek to renegotiate the price agreed previously under this project.
And secondly, the pricing formula was not revealed which understandably is why analysts were waiting for the agreement to be uploaded prior to giving their opinion on the deal. Had the government uploaded the deal a comparison with the usual LNG deals would have been possible, which are typically priced at around 10 to 15 percent discount to Brent, the global benchmark for crude oil pricing.
So who was taken into confidence with respect to the deal? Parliamentary Secretary for Petroleum and Natural Resources Shahzadi Umarzadi Tiwana told the National Assembly during question hour on 11th January 2016 that the sale and purchase agreement with Qatar for the import of LNG has been finalised and submitted to the Economic Co-ordination Committee (ECC) headed by Federal Finance Minister Ishaq Dar. The ECC approved it on 13th January. There is no evidence to suggest that the deal was ever discussed in a cabinet meeting.
Failure to take all stakeholders on board, including cabinet members as well as the general public has not only compromised Sharif administration's record on transparency but this style of governance does not generate any comfort level that decisions are being taken in a democratic manner after the views of all are heard and duly considered. To conclude, one can only hope that the government abandons this maula jatt style of governance and deals already signed and sealed should routinely become the property of the public.

Copyright Business Recorder, 2016

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