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PQA showing opposition to second LNG terminal

Port Qasim Authority (PQA) has shown strong opposition to the second LNG terminal reportedly planned by EETPL under the guise of expansion of the existing first terminal. This message has been conveyed by Secretary PQA, Muhammad Saqib to Deputy General Manager (Procurement) through a letter.

According to PQA, the Article-3 (iii) read with scbedule-3 of the Implementation Agreement between PQA & EETPL of June 23, 2014(IA) does not nullify the requirement of issuance by PQA of permits consents, and approvals under the PQA Act or otherwise as provided in Article-4.2 of the IA. The IA has to be construed as a whole in order to ascertain the effect of its several clauses. The Article-4.2 clearly contemplates PQA's permission, consent and approval as an obligatory pre-requisite to any expansion of the Terminal under Article-3(iii) read with Schedule-3 of the IA. The word "promptly" in Article-4.2 has been used in the "without delay/time" context and does not mean "automatically" or "mechanically' or "mandatorily". The Article-3(iii) read with Schedule-3 of IA cannot be construed or given effect in an un-circumscribed manner derogating PQA's regulatory role in respect of Port Qasim under the PQA Act, 1973.

Secretary PQA further stated that the first LNG terminal in Port Qasim was a "fast track LNG project" as stated in the recital "A" to the IA. The site permission to EETPL for the first LNG terminal in Port Qasim was based upon the criterion it was a "fast track LNG project" which but for it being a "fast track LNG project" would not have been granted.

He argued that the site for a second LNG terminal at Port Qasim or expansion of the existing LNG terminal by EETPL are subject to various factors. Port operations and various other considerations, do not favour or allow the present EETPL's LNG site for establishing a second LNG terminal nor for the expansion of its earlier LNG terminal.

PQA after SSGC's advertisement for 2nd LNG terminal on October 19, 2014 informed Ministry of Petroleum & Natural Resources/SSGC that future LNG developer may select a "site" for the 2nd LNG terminal on BOT basis in Port Qasim's LNG zone or adjoining creeks i.e. Char-Chhan Wajddo & Jhari Creek subject to submission of NoC from SEPA, QRA study and navigational simulation study, compliance of all international codes & standards. The present EETPL's LNG terminal site, being an exception on the basis of a "fast track LNG project", is outside the abovementioned LNG earmarked areas.

"The establishing of a second LNG terminal by EETPL at its present LNG site under the guise of expansion of the existing EETPL LNG Terminal cannot be considered and is unacceptable to PQA. Furthermore, a second LNG terminal is outside the ambit of the PQA & EETPL's IA nor does it come within the meaning of the term "expansion" in Article-3(iii) read with Schedule-3 of IA," Secretary PQA added.

EETPL as to date has not applied to PQA for NoC for an expansion of its present LNG terminal nor for establishing a second LNG terminal at its present LNG site. Earlier, SSGC in a letter to PQA stated that a requirement under the RFP floated requested all bidders to provide a valid provisional NoC from PQA for setting up the second LNG terminal at the bidder's proposed location in PQA specifying the co-ordinates.

In support of EETPL's bid for the project, EETPL has submitted and relied upon the concession granted under the Implementation Agreement with PQA on June 23, 2014 ("IA"). In particular Clause 3(111) read with Schedule 3 of the IA that they: (i) do not require a PQA NoC or consent for any expansion; and (ii) are consequently effectively pre-approved to implement the LNG terminal 2 project at PQA without any further conditions being imposed by PQA.

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