ISLAMABAD: The government has constituted a committee under the chairmanship of Railway Minister Azam Swati to investigate the reasons behind the delay in dry docking of Engro’s Floating Storage Re-Gasified Unit (FSRU) and fix responsibly for the mess. Well-informed sources told Business Recorder that on June 18, 2021, Petroleum Division briefed the Cabinet Committee on Energy (CCoE) forum about the case. It was informed that Engro Elengy Terminal Private Limited (EETPL), the terminal operator, requested dry docking of FSRU in the light of LNG Services Agreement (LSA) with SSGCL. The terminal operator was entitled to withdrawal of LNG services infrastructure of any component thereof from service for the purposes of carrying out any of the planned works including schedule inspection, repair, maintenance, modification of LNG services infrastructure or any component thereof including the dry docking of FSRU. Therefore, due to this activity, reduction in the daily delivery and storage capacity shall occur.
According to sources, in order to reduce the impact of activity, on routine supply of LNG, the Petroleum Division proposed the following RLNG/gas curtailment measures, in order of priority, with a view to supplying maximum RLNG to power plants as well as export industry, during the period of reduced availability owing to dry docking, stretching from June 29, 2021 to May 05, 2021.
(i) SNGPL supply up to 70 MMCFD RLNG to two fertilizer plants may be suspended; (ii) supply up to 40 MMCFD RLNG to CNG sector in Punjab may be suspended; (iii) supply up to 70 MMCFD indigenous gas to CNG sector in Khyber Pakhtunkhwa may be suspended and the spared volumes be used by SNGPL for system balancing and/or diversion to power plants, subject to charging of RLNG tariff (where agreement with power plant for supply of indigenous gas is not available); and (iv) supply up to 115 MMCFD RLNG to non-export general industry in Punjab and KP may be suspended.
In SSGCL system, Petroleum Division proposed that supply of RLNG/system gas to CNG sector and non-export general industry may be suspended and RLNG supply to KE may be reduced and supply of system gas, as saved from CNG/Non-export industry, may be provided to KE for meeting its demand.
During a discussion, Minister for Maritime Affairs, Ali Zaidi and Secretary, Power Division, Ali Raza Bhutta opposed the proposal primarily because the terminal operator did not give a sufficient notice for the activity. He stated that the operator is bound under the agreement to give a specific date at the start of the year for the purpose of planning. This notice, therefore, is against the agreement and should not be allowed. The Minister for Finance, Shaukat Tarin, also opposed the proposal as it would affect the national interest due to reduced economic activity in the country because of reduced supply of RLNG.
Asad Umar, as Chairman CCoE, observed that this was the “most inappropriate” time for the dry docking as economic activity would be in full swing at the start of the financial year. He emphasized that besides this factor, the primary question was related to the legal implications out of contractual obligations of the contract between SSGCL and EETPL. Therefore, he observed that legal opinion of the Law Division was essential for taking an informed decision. The Minister for Finance also suggested that an inquiry be conducted into reasons as to why the decision of dry docking was not taken well in advance.
The Minister for Railways stated that disruption in the operation of Sahiwal Coal Plant was not affected by the railway accident as appeared in a section of press. He clarified that the Sahiwal Coal Plant was holding sufficient reserves.
According to sources, CCoE rejected the summary due to the reason of peak summer season and without proper notice as required under the agreement. However, the Petroleum Division was directed to respond to the operator after full deliberation and consultation with the Ministry of Law and Justice. The stance must be covered under the law and defendable in the court of law.
However, on June 24, 2021, the CCoE showed leniency in allowing dry docking of Engro’s Floating Storage Re-Gasified Unit (FSRU) due to contractual obligation as this indication came from the Minister for Energy, Hammad Azhar.
The CCoE has also constituted a committee under the chairmanship of Minister for Railways to conduct an inquiry and fix responsibility for delay, if any, in deciding issue of FSRU dry docking and submit a report to the CCoE for consideration within 30 days. The Chairman may co-opt members for the inquiry as he deems fit. Secretariat support to the Committee will be provided by the Ministry of Railways.
Copyright Business Recorder, 2021