The Ministry of Petroleum has issued a Letter of Comfort (LoC) to the Dutch company, '4Gas', for the multi-billion dollars Pakistan Mashal LNG Project (PMLP), Business Recorder has learnt. The Economic Co-ordination Committee (ECC) of the Cabinet had directed the Ministry of Petroleum to evaluate the financial health of '4 Gas'.
The company submitted its accounts to the Ministry of Petroleum, thereby removing all concerns over its financial health--information that will be submitted to the ECC. '4Gas' indicated that the United States government agency, Overseas Private Investment Corporation (OPIC), and the World Bank affiliate International Financial Corporation (IFC) have committed to provide $370 million financing for setting up a terminal at Port Qasim for LNG import. The '4Gas' management has estimated an investment of over $600 million, to be completed in two phases under 'LNG Mashal Project'.
"After being satisfied regarding financial health of '4Gas', Petroleum Ministry is to seek guidance, again, from the Law Ministry to award contract to '4Gas'," sources said. The Petroleum Ministry had allegedly '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 also be held," sources said.
Some LPG lobbies, interested in PMLP, had reportedly informed certain government quarters that '4Gas' was moving towards financial default and would be unable to carry out the project. "Petroleum Ministry had tasked financial consultants to analyse the financial health in view of the report submitted by '4Gas'," sources added.
The Ministry of Petroleum had been considering the option of floating a fresh tender for LNG import under PMLP, in case '4 Gas' would not be able to ease concerns over its finances. According to sources, the Ministry of Petroleum had been divided over the issue: one group recommended awarding the contract to '4 Gas' and French company 'GDF' as it believed that fresh tendering of the project would take too long which would worsen the energy crisis due to non-availability of gas. Another group suggested fresh tendering of the project to facilitate the LPG group that recently procured the necessary licence for setting up LNG terminal and wanted the contract of PMLP by scrapping proposed deal with '4Gas'.