Pakistan LNG Limited (PLL) and SOCAR Trading Company, an international marketing and development arm of the State Oil Company of Azerbaijan Republic, have inked a framework agreement to procure LNG cargoes.
Addressing the signing ceremony of the agreement for the delivery of LNG cargoes to Pakistan, Prime Minister Shehbaz Sharif on Monday said that the agreement would have a life of one year.
“The agreement would be extendable by one more year,” he added.
Lauding President of Azerbaijan Ilham Aliyev, PM Shehbaz said during his last visit, the two leaders discussed enhancing bilateral cooperation.
“Immediately on my return to Pakistan, we have given approval to their airline to land at Islamabad, Lahore and Karachi, in a big step forward to promote tourism, investment, and exchange of delegation between the two countries,” he said.
The deal is part of Islamabad’s efforts to ensure energy security as the cash-strapped nation in recent months has failed to secure LNG bids from international markets amid high prices.
Under the framework agreement, SOCAR has offered LNG supply to Pakistan in the form of one cargo per month, on flexible terms and with a credit line for 30 days after delivery of the cargo on a one-year contract basis, which is extendable by another year.
The agreement is expected to foster regional integration and cooperation and strengthen energy security.
“Under the agreement with SOCAR, Pakistan will decide whether it wants to purchase LNG cargo at the offered rate or not. If we don’t purchase it, we will not have to face any financial penalty, which is a big step forward between the two brotherly countries,” said PM Shehbaz.
Last month, the Economic Coordination Committee (ECC) of the Cabinet allowed PLL to execute a proposed framework agreement with SOCAR Trading.
Earlier, Pakistan’s petroleum minister Musadik Malik told a news conference that Azerbaijan will supply an LNG cargo every month to Pakistan at a “cheaper price.”
“Under the contract, the Central Asian country would provide Pakistan with distressed LNG cargo on a monthly basis. The LNG price would be much lower than in the international market,” Malik said back then.
“Under the terms of the contract, it would be Pakistan’s choice to accept the cargo or not. However, Azerbaijan would be obligated to provide distress cargo on a monthly basis,” he added.
Power tariff hike
Meanwhile, the prime minister said the decision to hike electricity rates was made as it was a prerequisite of the International Monetary Fund (IMF) programme.
“It was an IMF condition to raise electricity rates.”
“However, no increase has been made in electricity rates for those customers consuming 0 to 200 units of electricity, which makes up 63% of the household consumers. Moreover, other than this, 31% of household consumers are also being provided partial subsidy,” he said.
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