S Rahman

Business circles have hailed Pak-Qatar LNG deal in view of the immense benefits that would consequently accrue to Pakistan’s economy.

President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Abdul Rauf Alam, and Pakistan Industrial and Traders Associations Front (PIAF) Chairman, Irfan Iqbal Sheikh, have appreciated the historic agreement of Liquefied Natural Gas (LNG) supply from Qatar.

The President FPCCI further expressed his expectations that after import of LNG from Qatar, the issue of the shortage of natural gas would be resolved and the industrial units in Punjab would remain in operation without interruption of any kind including the seasonal interruption.

And according to PIAF Chairman Irfan Iqbal Sheikh, this landmark deal would help the government overcome energy shortfall in the country by at least 20 per cent. Sheikh said that the deal would help save $1 billion annually while a further $600 million could be saved in diesel costs for power generators. He further said, “46 billion dollars investment from China, LNG agreement with Qatar and decision of export of manpower to other countries will help country achieve a growth target of seven per cent in a speedier manner. This entire package is certainly a game changer for the local industry and with the supply of 3.75 million tonnes of LNG to the energy-starved country, the supply-demand gap, which is standing at approximately 2-4 billion cubic feet per day, will be decreased”.

The statements given by the two top leaders of business and industry stand quite in conformity with actual facts. The LNG project is going to be a real game changer for Pakistan as it will save the country more than one billion dollars per year when expensive energy is replaced with this cheaper, safer and cleaner fuel. It is a fact that Liquefied Natural Gas (LNG), as a fuel for power generation (over furnace oil), is more efficient in power generation (60 per cent efficiency on Re-gasified Liquefied Natural Gas versus 45 % on alternate fuel) and it has much lower operational and maintenance costs. As such, it is friendlier on the economy in the form of much lower electricity tariff for the masses (9 cents/kWh or Kilowatt hour for RLNG versus 18 to 20 cents/kWh for diesel).

This is the reason why the world is turning towards LNG. Global and emerging economies such as China, Korea, Japan, India, Thailand, Indonesia, European Union and Brazil ensure that LNG remains part of their ‘energy mix’. Japan imports 80 MTPA (million tonnes per annum) of LNG whereas India imports 15 MTPA.

LNG-based power production will cost 9.5 cents per kWh whereas the cost of diesel-generated energy comes to 18 cents per kWh while energy produced through local gas costs approximately 7.5 cents per kWh. In Pakistan, natural gas accounts for 35 % of the entire power generation, 23.8 per cent of industrial use, 15.6 pc fertilizer, 5.4 pc CNG and 18.1 pc household uses. Pakistan currently stands with a gas shortfall of two billion cubic feet per day (BCFD) or 33 pc of its total gas demand.

Pakistan’s indigenous gas supply is expected to deplete to 1,500 MMSCFD in 2030 (from 4,000 MMSCFD at present) and the demand-supply gap is expected to increase to a mammoth 7,000 MMSCFD in the next 15 years as local gas reserves continue to deplete fast. It is a well-established fact, acknowledged by businessmen, industrialists and experts alike that Liquefied Natural Gas (LNG) import is the fastest short-term solution to Pakistan’s crippling economic needs.

Pakistan’s move to procure LNG from one of the world’s most leading LNG producers and exporters, namely Qatar, is being taken as a timely, wise step taken by Sharif government and pursued sincerely and perseveringly by Minister for Petroleum Shahid Khaqan Abbasi and Minister for Finance Ishaq Dar. A good few economists have termed the deal historic. According to these experts Qatar, by signing the Rs105 billion per annum agreement with Pakistan, has pledged to supply LNG at the rate which is the cheapest in the south Asian region.

According to the latest details available on the record, the LNG would be purchased from Qatar at the rate of five US dollars per MMBTU which is far cheaper than the LNG imported by one of the biggest buyers and users of LNG i.e India.

Before the inking of the agreement between Pakistan and Qatar, many critics of PML-N government and Prime Minister Muhammad Nawaz Sharif were spreading rumours that they smelt a rat in the whole deal. They had also been misleading the public by opining, unscrupulously, that Pakistan was unable to finalize a deal at cheap prices. They had also been telling the public, quite wrongly, that Pakistan would get gas from Qatar at a price almost double the price paid by India for import of LNG from the same source. The reality, when dawned, in the shape of a final agreement signed in the presence of Prime Minister Nawaz Sharif at Qatar, has dispelled all these wrong impressions and totally belied the misleading speculation.