The federal government has hinted at shifting of existing two Liquefied Natural Gas (LNG) terminals to other locations, as Ministry of Maritime Affairs (MoMA) claimed an additional $ 14 million financial loss due to current location of terminals, sources close to Minister for Maritime Affairs told Business Recorder. This transpired at a recent meeting of Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister, Asad Umar on the basis of a summary submitted by the MoMA.
Ministry of Maritime Affairs revealed that under Rules of Business, 1973, import, export, refining, distribution, marketing, transportation and pricing of all kinds of petroleum and petroleum products is the domain of Petroleum Division, while Ministry of Maritime Affairs has been assigned safety of ports and regulation of matters relating to dangerous cargo and declaration and delimitation of major ports and the constitution and power of authorities in such ports. It was stated that indentifying, specifying and approval of LNG terminals at ports is in the domain of Ministry of Maritime Affairs.
The sources further stated that Port Qasim Authority (PQA) Board in its meeting held on May 7, 2011 and August 10, 2011 indentified Jharri Creek, an off-shoot of Chhan Wadeo Creek, to be the most appropriate zone for LNG. However, no independent technical studies have been undertaken so far. An independent study was recommended which complies with the industry safety standards with zero impact on normal port traffic. It was stated that current LNG terminals were allowed to be installed on PQA main channel against the recommendations of PQA, which resulted in: (i) congestion on all berths; (ii) significant amount of Forex is paid to international shipping companies in demurrages; and (iii) these terminals are a serious safety hazard.
It was stated that on arrival of LNG ship in the main channel the traffic of all other ships is halted. At current level of operational capacity of LNG plants, the port operations remain suspended on an average of 40 days/year causing an estimated additional loss of 9 million per annum. Further, closure of port operations may increase to an average of 50 days/year, if both LNG plants operate at 100 per cent capacity resulting in estimated additional loss of $ 14 million per annum.
Ministry of Maritime Affairs apprised that PQA Board in its meeting held on September 13, 2018 approved provisional allotment of two additional LNG terminals sites. However, PQA Board was requested to reconsider the decision in the light of the observations conveyed to them.
Ministry of Maritime Affairs submitted the following recommendations to the ECC for consideration in order to safeguard Pakistan's strategic and economic interest: (i) LNG Policy 2011( para 4.3) may be amended to reflect that No Objection Certificate (NoC) from SEPA, QRA study and navigational simulation study shall be performed on a suitable site/location allocated by MoMA/ port authorities within the specified LNG zone as per LNG Policy 2011 covering, security, safety, environmental and traffic aspects of the port; (ii) as per Rules of Business, 1973, establishment of all maritime terminals including LNG falls within the domain of Ministry of Maritime Affairs. Hence, "establish LNG import terminals for securing alternative gas supply possibilities" may be excluded from the purview of Pakistan LNG Terminals Limited (PLTL), housed under Petroleum Division; Ministry of Maritime Affairs in consultation with the port authorities shall perform this function; and (iii) the Cabinet decision of May 31, 2018 may be withdrawn, enabling Ministry of Maritime Affairs/ PQA to indentify a specific zone for LNG terminal through an independent technical study by a third party.
After a detailed discussion on the concerns of Ministry of Maritime Affairs, the ECC directed the Ministry to carry out a cost benefit analysis/study for shifting of existing LNG terminals to suitable places and assess the requirement for setting up new LNG terminals in the country.
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