Pakistan will save $3bn thanks to Qatar LNG deal, says PM

Prime Minister Imran Khan on Friday revealed that Pakistan had signed a deal with Qatar, wherein the latter will provide Pakistan three million tons of liquified natural gas (LNG) for 10 years.

The premier witnessed the signing of the agreement that took place in the federal capital at the PM House.

Federal Minister for Energy Omar Ayub Khan and Qatar’s Energy Minister Saad Sherida al-Kaabi inked the agreement. Qatar’s Minister al-Kaabi termed as “historic” the agreement with Pakistan and expressed confidence that it would open up new vistas of development.

The prime minister informed that Pakistan will save $300 million each year as a result of the deal. “And in 10 years’ time, Pakistan will save $3 billion,” he added.

He highlighted that these issues the country was facing where inherited from previous regimes.

“When a difficult time comes upon the nation, a country has to think of ‘out-of-the-box’ solutions,”  he said during a ceremony in Lahore wherein the premier laid the foundation-stone of the country’s first-ever Central Business District (CBD), a commercial hub aimed at ensuring ease-of-doing-business.

The concept will plan activities in accordance with the market requirements and as per the unique dynamics of each district.

Addressing at the foundation-laying ceremony, the prime minister said that the project would touch the trading volume of Rs6,000 billion with its first phase of Commercial and Business Hub to generate activities worth Rs1,300 billion.

“With huge tenders involved, this project will witness a major take-off in a short span of time and also transform Lahore into a modern city,” he said.

Prime Minister Imran said that the environment-friendly and urban generation project will be carried out on vertical principles with the construction of high-rise buildings.

He regretted that earlier, lack of planning resulted in a haphazard expansion of big cities like Lahore and Karachi that became unmanageable with time.

He stressed that vertical construction was the effective-most solution for the management of big cities in order to accommodate the maximum population.

He said that the CBD would ensure environment-friendly policies with its unique features of botanical gardens and green spaces. He further said that in the first phase, the project will generate Rs1,300 billion, through which the government will receive Rs250 billion in taxes.

The prime minister said that when the Walton airport is de-notified as per the project’s plan, tall buildings can be constructed in Gulberg and Ferozepur road.

The premier underscored that he was the biggest supporter of preservation and conservation of the environment and had always emphasised considering the environmental aspect while carrying out any project.

He pointed out that the apathy of previous governments inflicted huge damage to the environmental conditions of urban cities in particular.

“The entire city’s sewerage is going in River Ravi,” he said. “This sewerage is going down the river. A lot of people drink water from the rivers,” he said, adding that even the water table of Lahore was declining.

PM Imran said that for the first time, the government introduced policies to provide low-cost housing and encouraged banks to offer mortgage facility to facilitate the common man.

The Naya Pakistan Housing, he said, was a significant project for the uplift of low-income groups who struggled hard to own a residential place.

He said that for six consecutive months, Pakistan’s current account remained in surplus and acknowledged the contribution of overseas Pakistanis in this regard.

“Our textile exports are also witnessing an increase and new industries are being set up across the country,” said the premier while giving an example of the economy’s condition.

The prime minister lauded the efforts of the Punjab chief minister for maintaining a faster pace of development projects in the province.

Towards the end of his address, the premier announced that these projects would, in total, generate Rs6,000 billion in revenue. However, he became annoyed that no one had clapped when he declared the amount.

“I think all of you sitting in the front have had a late night, because you seem to be asleep. No one clapped at the announcement that Rs6,000 billion will be generated,” he said. “Aleem Khan, you should know about these things because you are in business.”

Separately, Special Assistant to the Prime Minister (SAPM) on Petroleum Nadeem Babar said Pakistan would save an amount of around $3 billion in the import of LNG under a 10-year agreement signed with Qatar at 10.2 per cent of the Brent, which would be effective from January 2022.

“Today we have signed a very important agreement with Qatar. Our earlier agreement [signed by the PML-N government] with Qatar was 13.37 per cent of the Brent, under which an average of five cargoes arrive every month. But, we [the PTI government] has inked the deal at 10.2 per cent of the Brent,” he said while addressing the media.

This contract, he said, was almost 31 per cent lower than the previous agreement signed by the PML-N government. “It is a 10-year agreement and the price can be renegotiated after a period of four years.”

The SAPM said the existing agreement was of 15 years, under which the price was fixed for a period of 10 years.

Under the new agreement, he said, Pakistan would save around $317 million annually and $3 billion collectively during a period of 10 years.

Nadeem Babar explained that there were a number of amendments in the 10-year agreement. As per the old contract, Pakistan had given a letter of credit (LC) of $170 million to the Qatar government, but under the new agreement, the LC would be only $84 million.

In the new arrangement, he said, the import would be started with an average of two ships per month, which would be increased to four vessels in a period of three years.

Justifying the new deal, he said a contract of the Gunvor Company, which was operating at 13.37 per cent of the Brent, had expired in December 2020, while its second contract would be ending after 14 months. The new contract would be replacing the two expensive contracts, he added.

The SAPM said there would be a cushion for Pakistan to import an additional volume of LNG during the upcoming peak winter season, on a need basis, at the same 10.2 per cent.

“This agreement will be effective from next January, and if needed it can be executed two-three months before the commencement date, keeping in view the winter needs.”
Since the start of LNG import and till December 2019, he said Pakistan’s spot LNG purchase remained at an average of 11.90 per cent.

He termed the new LNG supply deal ‘historic’ as it would ensure economic stability.

“In the LNG trade, this price [10.2% of the Brent] is the lowest publicly disclosed contract ever.”

Answering a question, he said the imported LNG was mostly being consumed by commercial, industrial, power and Compressed Natural Gas (CNG) sectors. The LNG was not supplied to a common residential consumer, who rather got natural gas.

The SAPM said the process to strike the deal was started around two years ago when he had accompanied the PM during his first visit to Qatar.

“It is correct that the deal was discussed at the highest level of the government. The PM himself had talked to the Amir of Qatar thrice. It took a long time to strike the deal at 10.2 per cent of the Brent, which is the lowest publicly known contract in the world today.”