Ministry of Finance, Ministry of Water and Power and Law Division are hesitant to become members of the committee proposed by Ministry of Petroleum and Natural Resources to negotiate price with Qatargas for import of LNG, it was learnt.
Sources said that Ministry of Petroleum has solicited comments of Ministries and Divisions to its proposal that a nine-member committee may be constituted to negotiate the LNG price and other important issues with Qatargas before putting up a summary in this regard to the Economic Co-ordination Committee (ECC) of the Cabinet. A summary submitted to the ECC after the approval of Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi was not taken up and deferred.
Ministry of Water and Power argued that it is not a relevant ministry because LNG is an oil and gas subject and may therefore be omitted after consultation with stakeholders. Water and Power Ministry further proposed that a member from Oil and Gas Regulatory Authority (Ogra) may be an alternative option. However, Ministry of Petroleum stated that inclusion of regulator (Ogra) in the committee is not supported because of government to government negotiation. It further added that LNG would be mainly allocated to power sector and therefore a member from Ministry of Water and Power was included in the committee due to its pivotal role. Finance Division has raised objection to the nine member committee proposed by the Ministry of Petroleum to negotiate LNG import price with Qatargas. "The composition of the price negotiation committee with nine members is too large to serve as a tight co-ordinated team," stated Finance Division adding that some of the nominees like Chairman, Board of Investment (BOI), Secretary Law, Secretary Water & Power, Managing Director Inter-Service Gas Supply Limited (ISGSL) and Secretary Finance are not directly related to the matter of pricing of LNG as the basic role in LNG price negotiation committee would be played by Ministry of Petroleum and Natural Resources and Pakistan State Oil (PSO), being the processing agency. The Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) are also relevant to the extent that these would be the recipient of LNG from PSO and have technical skills. Therefore, it is proposed that Ministry of Petroleum may rationalise the proposed composition of the committee to an optimal size to serve as a well co-ordinated negotiation team".
Finance Division further suggested that Petroleum Ministry may define Terms of Reference (TOR) of price negotiation committee as well as clear parameters of price negotiation. Further, Petroleum Ministry may consider constituting a technical committee of sector experts to study various pricing models currently being used in the LNG market globally. Law Division has also shown unwillingness to be part of the price negotiation committee and stated that "as regards membership of the price negotiating committee, this Division reckons that at this stage, participation of the Law Secretary and his nominee is not required. The sponsoring Ministry, may, however, seek legal opinion of this Division, as and when required."
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