FeaturedInternationalVolume 13 Issue # 06

The LNG landmine

The controversy surrounding a $22 billion agreement with Qatar for providing liquefied natural gas (LNG) to Pakistan for 20 years refuses to subside even after the passage of two years of the pact. Efforts of governments of former Prime Minister Nawaz Sharif and current Prime Minister Shahid Khaqan Abbasi to keep its details under wraps have added to suspicions about it.


According to critics, the project is a source of over Rs20b annual corruption for some people who are close to former Prime Minister Nawaz Sharif. As the project was signed between two private companies, not between Pakistan and Qatar, it opened avenues of corruption for investors, linked to the former prime minister. It is alleged that he persuaded his close friends to invest in the project, in return for huge profits, at the cost of the interest of the people of Pakistan. Some say owners of big media houses are also partners in the project. According to complaints, the contract for the LNG import and distribution was awarded to the Elengy Terminal, a subsidiary of Engro, in 2013, in violation of the Public Procurement Regulatory Authority (PPRA) rules and relevant laws.


The project remained hidden from the public for some time but it was brought into the limelight by Awami Muslim League (AML) chief Sheikh Rashid Ahmed recently. He has filed a corruption reference against Prime Minister Shahid Khaqan Abbasi in the Election Commission of Pakistan (ECP), seeking his disqualification. “Prime Minister Shahid Khaqan Abbasi is not Sadiq and Ameen (honest) as he, among others, had signed an agreement (when he was the minister for petroleum and natural resources) to buy LNG which involved irregularities up to Rs200 billion,” he said in the petition. He intends to move the Supreme Court of Pakistan if the ECP does not entertain his petition. He claimed that he was receiving threats for filing the plea to open a case against the prime minister.


Earlier, the National Accountability Bureau (NAB), under its former head, had cleared the prime minister of wrongdoing after probing the issue for over 17 months. It registered a case on July 29, 2015, but it could not cross the inquiry stage in the period, contrary to former NAB Chairman Qamar Zaman Chaudhry’s claim that he had introduced a new strategy under which the process of complaint verification, inquiry, investigation and filing of references would be completed in 10 months. Ultimately, Abbasi was cleared in December 2016. The case was registered on the complaint of Shahid Sattar, an energy expert and former member of the Planning Commission, accusing Abbasi of misusing his authority and causing a potential $2bn loss to the national exchequer in 15 years. Other suspects in the case included former Petroleum Secretary Abid Saeed, Inter State Gas Systems (ISGS) managing director Mobin Saulut, private firm Engro’s chief executive officer Emranul Haq and the Sui Southern Gas Company’s (SSGC) ex-MD Zuhair Ahmed Siddiqui.


According to NAB documents, its prosecutors had recommended placing the names of all accused in the case, including Abbasi, on the Exit Control List (ECL), but the former NAB chairman abruptly decided to drop the case. The former NAB chief was considered a Nawaz Sharif loyalist and during his tenure he attempted to drop all corruption cases against the Sharif family. The dumping of the LNG case could be part of his strategy. Earlier, the Pakistan Tehreek-i-Insaf (PTI) had also announced that it would move the Supreme Court for reopening the LNG case but later dropped the idea and decided to raise the issue in the parliament to press NAB, under its new chief, to reopen the inquiry.


The agreement was inked between Global Energy Infrastructure Ltd. (GEIL) of Turkey and Qatar Gas Board, two private companies. Under the project, Qatar is providing $1 billion LNG to Pakistan annually. Qatar Liquefied Gas Company Limited will sell LNG to Pakistan State Oil (PSO) till 2031. It is alleged that the Petroleum Ministry, through Inter-State Gas Systems (ISGS), had illegally awarded the LNG terminal contract to Engro, a private firm, whose owner is a secret business partner of former Prime Minister Nawaz Sharif. Officials of Sui Southern Gas Company (SSGC) reported to the investigators that they had been bypassed as the procuring agency by the ministry when it empowered ISGS to award the LNG terminal contract. They said they were forced by the then petroleum minister to sign an agreement for the capacity payment of $272,000 every day to the private terminal company of Engro, which amounts to $100 million every year from the taxpayers’ money, whether the terminal operates or not. When the PSO management objected to it, it was sidelined and its board was dissolved on the pretext of an enquiry into a petrol crisis.


The price of the imported gas has also been an issue since the signing of the project. According to experts, $8 per million British thermal units (MMBTU) is too high as compared to prices in other countries, which range between $2 and $5 per MMBTU due to decline in LNG demand and increase in its international production. The purchase of LNG at a high price points out lack of transparency and involvement of billions of dollars in kickbacks in the deal.


The secrecy in the agreement lends credence to apprehensions about its fairness. It has not been discussed in the media, because of the involvement of media house owners in it and its technical details. All corruption cases of the Sharif family, pending for decades, have been opened on the order of the Supreme Court of Pakistan after the Panama Leaks.