ENGRO Chief Executive Officer Elengy Syed Muhammad Ali has said since being operational, the liquefied natural gas terminal has, so far, brought in about one million tonnes of it in 17 voyages which marks the 88 per cent use of the Engro Elengy Terminal Pakistan Limited handling and re-gasification facility during the first nine months. A contract obligation for the first year says the government is supposed to import around 1.5m tonnes.
Speaking with a select group of journalists in Lahore on Wednesday, he said, The Engro Elengy Terminal Pakistan has made a world record by building a $135m state-of-the-art LNG [liquefied natural gas] terminal in just 318 days at the Port Qasim, that too with a 100pc private investment. The LNG imported, so far, has been used by IPPs, the fertiliser, textile sectors and compressed natural gas sectors. This project will help Pakistan save more than a billion dollars per year in cost-to-energy terms."
He also proposed that the country would need another three to four fuel import terminals to curtail the current crisis and the import cost was expected to remain below 14pc of Brent's three-month average price in slop form. He went on, "The capacity and use charges at the Elengy Terminal stand at $0.66 per MMBTU [one million British thermal units], which is the lowest in the world compared to other regional terminals, such as the Arun LNG Terminal of Indonesia, which charges importers $2.5, the Kochi Terminal of India $1, the Adriatic and the LNG Toscana terminals of Italy $1.47 and $1.2, the Klaipedos Nafta Terminal of Lithuania $0.88 and those in China, Korea and Japan charge $0.8 to $1 per MMBTU.
"The numbers widely quoted of $272,000 per day charges to LNG terminal by the government is misleading. This is just the first year rate and daily imposed capacity charge for the whole 15 years stood at $219,589 per day. These charges include all the costs such as FSRU lease rate, taxes, royalties, manpower cost, insurance cost, operations and utilities cost, maintenance costs and CAPEX of $135m the terminal has spent. All of these are recoverable under the terminal's re-gasification. LNG is by far the cheapest fuel for energy generation in Pakistan. The per mmbtu cost of imported fuel alternates at $10.62 for furnace oil, $20.03 for high speed diesel, $17.6 for LPG and $9.37 for re-gasified LNG."
He claimed that the economic cost of the gas shortages was causing Pakistan a loss of up to $1bn per year as the country was forced to import expensive furnace oil, kerosene, LPG and diesel to make up for energy requirements. "Up to 1,200 to 1,500 megawatts of power generation capacity are under 35pc of the use because of the unavailability of gas and the government's inability to bear the fiscal impact of running these plants on diesel or furnace oil, which is an expensive fuel. Additionally, the government continues to pay the capacity payments to such power producers under the IPP regime," he added.
He went on to argue that this was the reason the world "is turning towards the LNG. Global and emerging economies such as China, Korea, Japan, India, Thailand, Indonesia, European Union and Brazil ensure LNG remains part of its energy mix". He said, "Japan imports 80m tonnes of LNG every year, India imports 15 MTPA. In addition to being cleaner and safer fuel, LNG import should be recognised as the fastest solution to ease the burden on Pakistan's economy. The LNG, as a fuel for power generation over furnace oil, is more efficient in power generation [60pc efficiency on RLNG vs. 45pc on alternate fuel], has much lower operation and maintenance costs and thus is friendlier on the economy in the form of much lower electricity tariff for the masses (9 cents/kwh for RLNG vs. 20 cents/kwh for diesel)."
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