THE INTERNATIONAL NEWS (KARACHI:): All hopes for supplementing flagging domestic gas supplies were dashed earlier in the day as the Economic Coordination Committee (ECC) of the Cabinet announced directives for retendering Mashal LNG project, they said.
“This is not good for the country,” said Munawar Baseer, who spearheaded Mashal in 2006 as Managing Director of Sui Southern Gas Company (SSGC). “We need gas on an immediate basis. Waiting for another five years is out of the question.”
The ECC decision follows Supreme Court’s last year ruling, which did not find any corruption in the LNG import project, but asked the government to invite applications from companies, which wanted to participate in the billion-dollar terminal.
The United States-based 4gas and French GDF Suez were awarded the government guaranteed contract for import of LNG.
However, that hit snags as many local and foreign companies jumped in to get their share, the officials said.
Baseer said that retendering the documents involves a long process of inviting bids, short-listing the companies and negotiation on the price.
“This might take years now, whereas gas supply shortages are already apparent.”
Large parts of Khyber-Pakhtunkhwa and Punjab continue to face gas disruption on daily basis as the distribution companies struggle to meet demand.
Production from domestic fields has not increased during the last few years.
Gap between domestic supply and demand has widened since 2005. According to the government estimates, the shortage stands at 1,000 million cubic feet per day, while production is under 4,000 MMCFD.
Mashal LNG would have imported 500 MMCFD by the end of 2012 when the shortage was expected to reach its peak.
“But we are already seeing the problems.
Factories have to be shut for days and there are already discussions for cutting gas to CNG fuel stations for longer durations,” Baseer said.
The other import project of Iran-Pakistan pipeline has also lagged behind.
Energy experts and government officials have all along laid stress on the Mashal LNG project for meeting growing demand in the short run.
Naeem Sharafat, who led the project on behalf of SSGC, feared that foreign companies would not be interested in committing to Pakistani market.
“After what happened with 4gas and GDF Suez, the risk of participating in the project has gone up substantially.” He said that the ECC approved 4gas as the project implementer twice and even gave it exclusive rights for the import, but then the decision to retract all those commitment is not only unfair, but disastrous.
Sharafat said that the deal was transparent and there was no deviation from the original plan. “4gas did not initially share the details of its suppliers because of the confidentiality clause in the agreement.”
International Finance Corporation (IFC) has announced to be part of the project with 10 percent equity share, he said. “Chances of any sort of corruption are minimal with involvement of IFC.”
Initially, the Mashal project included construction of the re-gasification plant, but later 4gas was allowed to bring a ship installed with gasification equipment.
4gas representative Mustafa Kamal Qazi refused to comment.