After the introduction of a plan to improve ease-of-doing-business from the government, five private sector companies are planning to set up Liquefied Natural Gas (LNG) terminals in Pakistan. These terminals will have the capacity to re-gasify 500-700 Million Cubic Feet per Day (MMCFD).
“The consortiums of Exxon, Shell, and Mitsubishi besides Spanish and French companies are poised to establish LNG terminals in Pakistan, who are considered to be the world-leading players in the energy sector,” said a senior official privy to the petroleum sector developments.
Pakistan’s global ranking in Ease of Doing Business (EoDB) has improved to 136 out of 190 countries in 2018 compared to 147 out of 190 in 2017.
The official said that the federal cabinet has recently cleared the private sector companies, adding:
A terminal, as per international standard, takes almost two years to complete once its construction starts.
Currently, two LNG terminals operate at Port Qasim Karachi, injecting around 1200 MMCFD gas in the distribution network. The capacity of Floating Storage and Re-gasification Units (FSRUs) is also being increased, stated the official.
Petroleum Division plans to bring 400 MMCFD LNG in the system by December, out of which “200 MMCFD is guaranteed as tender has already been floated to ensure transparency.”
He said that the government wants to engage private entities in the LNG sector by removing all bureaucratic hurdles under the ease-of-doing-business plan. For that matter, new legislation is being drafted to ‘open up the LNG sector’ for attracting more investors. LNG is considered to be the only available fast track option to meet the country’s ever-growing energy needs, he added.
Furthermore, the official elaborated that the private company will not need a government guarantee if it is not selling the gas to the government.
“A private company will be able to import its own LNG for supply to the industry.” He said the price of government imported LNG is regulated by the Oil and Gas Regulatory Authority (OGRA) and if the private sector opts to sell gas to retail consumers, the price would be determined by the authority.
The Government of Pakistan aims to improve the quality of the regulatory environment and promote private investment across the country. As a result of recent business reforms, Pakistan’s ranking in the World Bank Group’s Doing Business Report 2019 has improved by 11 points from 147 to 136 out of 190 economies.