The Economic Coordination Committee (ECC) of the Cabinet has allowed Pakistan LNG Limited (PLL) to execute the proposed framework agreement with State Oil Company of Azerbaijan Republic, SOCAR trading.
The meeting of the ECC was held under the chair of Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar.
The Ministry of Petroleum presented the summary with regards to the approval of the framework agreement between PLL and SOCAR trading. As per the summary, PSO and PLL are importing liquefied natural gas under the long term LNG supply contracts to minimise the gas demand and supply gap.
Pakistan LNG Limited (PLL) is a public sector entity which operates under the governance of the Ministry of Energy (Petroleum Division), Government of Pakistan (“GOP”). The company operates on the strategy of solving Pakistan’s energy and gas crises.
For the longest time, PLL has been importing up to 3 LNG cargoes through spot tendering conducted from time to time to meet seasonal peak demand. Spot tendering refers to a need-based procurement of the said LNG from the international spot market of LNG, the prices in which are subject to many volatilities.
However, PLL has been facing considerable difficulties in procurement of spot LNG cargoes since June 2022, owing to exorbitantly high international LNG prices as well as Pakistan downgraded credit rating.
Apart from the developments made in the ECC session today, the PLL has also been exploring availability of a greater LNG volume through government-to-government (G2G) agreements with different countries. In this regard an inter-governmental agreement has already been signed between Pakistan and Azerbaijan for cooperation in the field of energy.
Sources close to the development said that the petroleum division has proposed that ECC may allow PLL to execute the proposed framework agreement with SOCAR trading and evaluate the prices of LNG cargoes to be offered by SOCAR as per the price evaluation mechanism approved by PNC in its meeting on March 1, 2023.
According to the Finance division, the ECC considered a Summary of the Ministry of Energy (Petroleum Division) regarding the Framework Agreement between Pakistan LNG Limited (PLL) and SOCAR. In this regard, the ECC after detailed discussion allowed PLL to execute the proposed framework agreement with SOCAR Trading. The ECC directed the Ministry of Petroleum to determine Pakistan’s need for LNG at least three months in advance on a rolling basis.
The ECC also approved Rs. 404.769 million as TSG in favour of the Cabinet Division for various requirements of 6 Aviation Squadrons.
The ECC also discussed and approved Rs. 157.734 million additional funds in favour of Ministry of Industries and Production for the payment of Employees’ salaries of Heavy Electrical Complex (HEC), markup to Bank of Khyber, and operating/ running expenses subject to reconciliation of figures from Finance Division. It further directed the Privatization Commission to complete the privatisation process of HEC by 30th June, 2023.
