Govt Considering Amending LNG Terminal Agreements

The government is planning to review the agreements pertaining to the Liquefied Natural Gas (LNG) terminals signed by the previous government over accusations of giving a higher rate of return to investors.

The issue came up for consideration before the meeting of Economic Coordination Committee (ECC) of the cabinet. During the meeting, officials from Petroleum Division informed the committee that the rate of equity/rate of investment for the first LNG terminal was 15 per cent while the investment rate for the second terminal was 15.4 per cent.

The members of the meeting observed that the rate of return on the investments was higher than recommended. They deemed that the evaluation of the said agreements was important to find out a chance to revise or amend the agreements.


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The ECC directed the Petroleum Division to seek legal advice from the Law and Justice Division in this regard and find out an option to revise the terms and conditions.

It further instructed the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA) to present with further details of equity and the rate of return on equity and investment for both LNG terminals so the committee can deliberate on it further.

The officials from Petroleum Division also told the committee that the previous government had floated the tenders for the first terminal through Inter State Gas Systems (ICGS) in August 2013, even though it was a brownfield project.

As for the second terminal, it was a greenfield project and the government had floated a competitive and open tender for its construction through Pakistan LNG Terminal Limited (PLTL) in 2015.

The officials further apprised the committee that the second terminal was not awarded on the Independent Power Producer (IPP) cost-plus model, rather it was based on a commodity/tariff bidding model.

Via: Express Tribune`

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