Talks with LNG terminal cos

ISLAMABAD: Cabinet Committee on Energy (CCoE) has constituted a sub-committee to deliberate the matter on a summary moved by the Petroleum Division regarding negotiations with the LNG terminal companies.

Minister for Planning, Development and Special Initiatives Asad Umar chaired a meeting of the CCoE on Thursday.

On a summary of the Petroleum Division regarding negotiations with the LNG terminal companies, the CCoE set up a sub-committee to deliberate the matter and report back to the CCoE within a week.

The Petroleum Division also apprised the CCoE on the updated status of the dispute between Pakistan LNG Terminal Ltd (PLTL) and Pakistan Gas Port Consortium Ltd (PGPCL).

The Power Division briefed the committee on various measures, which were under consideration to reduce electricity prices.

The proposal included measures such as rationalising the capacity charges of government-owned power plants, exploring the possibility of extending the tenor of loans of various power plants, and fuel cost optimization.

The CCoE set up deadlines for various actions to be completed to achieve their objectives.

The CCoE was also apprised about the tax refund issues of the power sector and the need to streamline the process of payment of the GST by the DISCOs.

The CCoE decided to recommend to the cabinet that the pending tax refunds may be paid forthwith.

Members of the CCoE including Minister for Railways Sheikh Rasheed, Minister for Energy Omar Ayub, Minister for Maritime Affairs Ali Zaidi, SAPM on Petroleum Nadeem Babar, and officials from the Power Division and the NEPRA were also present.

According to the sources, the demand of gas has been reduced due to lockdown, the Petroleum Division has submitted a summary to the CCoE in an effort to continue smooth operations of the LNG supply chain and avoid penalties.

The sources said that the government is considering a plan to cut domestic gas production and maximise imported gas consumption in power and fertiliser sectors.

They said that the government also plans to abstain from invoking the force majeure clause in the liquefied natural gas (LNG) deal with Qatar that may stop the progress of supplies but may also damage bilateral ties.

The sources said that in this regard, the Petroleum Division also informed that the committee that force majeure was a temporary excuse from obligations and required the party invoking the clause to act in a reasonable and prudent manner.

The declaration of force majeure would be a challenge.

They said that the situation facing the LNG industry due to oversupply and thin demand, there was little likelihood that force majeure would be accepted by the LNG suppliers.

The Petroleum Division also proposed to the committee that LNG importers should immediately take up the matter with the suppliers to seek a reduction in import volumes.

However, the option may be exercised by all LNG importers including the PSO and Pakistan LNG Limited (PLL) regardless of the import volumes and prices.

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