The National Assembly Standing Committee on Cabinet Secretariat has expressed its serious concern over sales and purchase agreement of liquefied natural gas (LNG) and sought a copy of the agreement, besides constituting a sub-committee to investigate the matter.
The committee met with Rana Muhammad Hayat Khan in the chair at the Parliament House on Monday, where it discussed different issues including progress report on the import and utilisation of the LNG, reservations of students regarding Central Superior Services (CSS) Exams 2016, revival of Air Indus, airport security force (ASF) housing scheme and others. It was also revealed in the meeting that many power plants running on LNG are generating electricity at high rates, while the price of furnace oil is much cheaper as compared to LNG.
Pakistan Tehreek-e-Insaf (PTI) MNA Asad Umar raised various questions about sales and purchase agreement of the LNG in the meeting and said that the government has given a benefit to Engro on sale and purchase agreement of the LNG. "The government has guaranteed returns which is more than 20 per cent dollars of RIF. It further says that the company could bring 50 per cent more capacity of it, which is an absolute crime. It is issue of guaranteed profitability," he claimed.
Chairperson Oil and Gas Regularity Authority (OGRA) Uzma Adil said that a copy of sales and purchase agreement of the LNG would be provided to the committee. She said that the agreements were signed among Sui Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, PSO and Engro. It is an issue of capacity charges, which are being mentioned by Asad Umar. She said that some clauses of the agreement are however confidential.
"Today, the whole charges of terminal are at the capacity of 400 MMCFD, when it will reach 600 MMCFD then the charges would be divided at this capacity and would come down. The cost of charges is not being transferred to general LNG consumer," she added.
"The total capacity of the terminal is 600 MMCFD. The fixed cost of the terminal charges for each MMBTU is US 0.63 cents at the capacity of 400 MMCFD. When it will reach 600 MMCFD then the charges would be reduced. I will request you, please call managing directors of Sui Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, PSO and Engro as well as senior officials of ministry of petroleum to discuss this issue."
Asad Umar said that all agreements are signed with the approval of the OGRA, which should protect the interest of 200 million people. He said that agreements could not be signed without the approval of Ogra. He said if some clauses of the agreement are confidential then the committee could hold an in-camera meeting.
After it, Rana Muhammad Hayat Khan constituted a four-member sub-committee headed by Rana Muhammad Qasim Noon to examine the issues regarding sales and purchase agreement of the LNG. According to documents available with Business Recorder, a total of eight licences of various companies for construction/operation of the LNG terminal are at various stages. The companies included; Pakistan GasPort Limited (PGPL) [modification request with changed project structure is under process with the OGRA. Public hearing is scheduled to be held in December 2016], Global Energy Infrastructure Limited (GEIP) [construction licence extended till 2019], Elengy Terminal Pakistan Limited (ETPL) [not interested in purchasing the project. being cancelled], Daewoo Shipbuilding and Marine Engineering Company (DSME) [revoked], Fauji Oil Terminal and Distribution Company Limited (FOTCO) [lapsed], Energy Elengy Terminal Limited (EETL) [commissioned/operational], Bahria Foundation [provisional to fulfil formalities for construction licence] and PSO [application valuation under process].
The LNG prices for the last nine months without GST have been $6.62/MMBTU in March 2016, $6.51/MMBTU in April, $7.1 in May, $7.83/MMBTU in June, $8.1/MMBTU in July, $8.2/ MMBTU in August, $8.43/MMBTU, $8.43/MMBTU in September, $8.32/MMBTU in October, and $8.7/MMBTU in November 2016.
The committee also expressed its strong displeasure over the poor results of CSS exams, 2016 as only 2.09 per cent students were able to pass their exams during the current year. The committee, therefore, directed the Federal Public Service Commission (FPSC) to take stringent measures to increase the percentage of passing students, instead of criticising education system and come up with the proposals to bring certain amendments so that talented students could pass their exams easily. The committee further directed that the FPSC may prepare an analytical report to find out the reasons of decline in percentage and report it to the committee within 30 days. The committee appreciated the performance of the National Collage of Arts (NCA) and directed that the management of the NCA may come up with proposals to expand its network in other cities so that the committee could support them accordingly.
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