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ECC approves 500mmcfd LNG import from Qatar

03 July, 2013

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ISLAMABAD: The Economic Coordination Committee (ECC) that met here on Tuesday with Finance Minister Ishaq Dar in the chair, approved the import of 500 mmcfd of LNG from Qatar on a government-to-government basis.

The LNG will be imported on a delivered ex-ship basis and to this effect the Ministry of Petroleum and Natural Resources would soon initiate talks.

The ECC, in its last meeting, scrapped the bidding process for the import of 400 mmcfd and 200 mmcfd of LNG after it found that the process was completed in haste and that the previous government had approved the LNG project with some questionable anomalies.

This time the ECC accorded approval to the new LNG project of 500 mmcfd to be executed on government-to-government basis.

However, an official who attended the meeting said various options are under active consideration that include: i) encouraging the LNG supplier to construct the LNG storage and re-gasification terminal for receiving the LNG on tolling basis; ii) entering into an agreement with an independent LNG terminal owner or operator for the provision of LNG receiving, storage and re-gasification services at its terminal under a tolling agreement and iii) developing LNG terminal or re-gasification facilities on public private partnership (PPP) basis.

An eminent expert on condition of anonymity told that the decision to import LNG from Qatar might not work as the PPP government had earlier tried to enter into an LNG deal with Qatar on government-to-government basis, but the Qatar government came up with higher rates which were later approved when the bidding process of 400 mmcfd LNG got completed.

The rates as a result of bidding were lower than the rates offered by the Qatar government. On top of that, the Qatar government has appointed its agent Conoco Philips to deal on LNG. They said that the Qatar government would first seek from the Pakistan government the terminal specs where the LNG will be delivered before settling the rates. They said that Qatar had earlier offered only 300mmcfd LNG and it might not provide 500mmcfd.

After due deliberations, the ECC approved the import of 300,000 tons of urea for Kharif 2013. It was further decided that 60mmcfd gas reserved for the Guddu Power Plant from Mari Gas field would be given to the fertiliser sector, which will help in production of 50,000 tons of fertiliser per month. This will bring substantial savings to foreign exchange reserves.

The Universal Service Fund and Research and Development Fund worth Rs66 billion constituted under the Pakistan Telecommunication (Re-organisation) Act, 1996, which had been held in accounts with scheduled banks, have been transferred to the Federal Consolidated Fund after necessary amendments in the rules pertaining thereto.

The transfer is in conformity with the provisions of the 1996 Act, which stipulates that the funds shall be under the control of the federal government.

The USF Rules 2006 also stipulate that the federal government shall have the possession, management and control of the fund, its income, undertakings, properties and assets. Similarly, the RDF Rules 2006 state that the federal government shall administer control and manage the RDF. Provisions in the act/rules relating to non-lapsing of credit balances in the funds and procedures for release and utilisation of funds therefrom remain un-changed. It may also be mentioned here that the Workers' Welfare Fund and the Export Development Fund, which are of similar nature, are also held in the FCF.

The ECC was informed that Rs322 billion had been paid to the IPPs. As per the ECC decision, the IPPs signed MOU with following conditions; (i) conversion to coal of projects with capacity of more than 2,000MWs; (ii) optimal utilisation of available capacities by IPPs; (iii) one month extension in the payment period to PEPCO/CPPA; (iv) settlement of dues in accordance with provision of Power Purchase Agreement (PPA) and (v) withdrawal of cases by the nine IPPs from the Supreme Court.

The ECC was further informed that this step would bring an additional 1,600-1,700 MWs to the national grid, which will considerably reduce power shortages in the country. This step will enhance the credibility of the country and will boost investors' confidence. The ECC has also decided to pay the remaining circular debt before July 21 instead of 10 August as originally envisaged. This step will bring further relief to the people.

The ECC was informed that month-on-month CPI-based inflation was estimated at 5.9% in June 2013. Food inflation is 7.9% and contributed 2.9% points to inflation in June 2013 while non-food inflation stood at 4.4% and contributed approximately 3.0 percentage points to CPI inflation.

The ECC was further informed that month-on-month inflation stood at 5.9% in June, 2013, while in India it was 9.3% (May, 2013) followed by Bangladesh, 7.9% (April, 2013) and Sri Lanka, 6.8% (June, 2013).

The ECC was informed that stock of wheat as on June 24, 2013 was 6.4 million tons showing sufficient quantity of wheat available for daily release to mills by provincial food departments and PASCCO. Sufficient stocks of sugar and POL products are also available.

End.

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