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ISLAMABAD:
The Asian Development Bank (ADB) has approved a $30 million project loan for Engro’s Elengy Terminal Pakistan Limited for the construction of the country’s first liquefied natural gas (LNG) regasification terminal.
The Manila-based lending agency approved the commercial loan days before the LNG terminal is set to start operations. The company is negotiating two other loans to meet the total project cost of $133.3 million. Work on the LNG terminal was completed by arranging bridge financing from commercial banks.
Engro is expected to receive $20 million from the International Finance Corporation and another $50 million from local banks, according to a press release issued by the ADB’s country office.
The rest of the project financing will come from equity proceeds of $33.3 million, it added.
Pakistan urgently needs to utilise its existing power generation capacity fully, while reducing reliance on costly imported diesel fuel for electricity generation, said Mohammed Azim Hashimi, an investment specialist in ADB’s Private Sector Operations Department.
He said the regasification of LNG will allow power generation facilities to reach their maximum potential, using a cleaner and more efficient fuel, and will support the country’s push for greater energy security and diversification.
The loan, to the special purpose unit of listed Pakistani company, Engro Corporation, will be used to build and operate the regasification facility at the Port Qasim, Karachi.
The plant will have regasification capacity for up to 3 million tons of LNG per annum from March onwards. The fuel, suitable for use at most of the country’s combined-cycle power plants, will be supplied to state-owned Sui Southern Gas Company’s (SSGC) gas distribution network via a new high-pressure pipeline.
Following a public tendering process in 2013, ETPL signed a 15-year LNG service agreement with SSGC. ETPL would provide LNG handling facility with toll charges and later increase imports to 400 million cubic feet per day (mmcfd) from 200 mmcfd in the beginning.
At present, the government is negotiating an LNG supply deal with Qatar. Additionally, private parties are also arranging supplies and would use Engro’s LNG terminal.
Multiple uses
The LNG consumption will help the government make estimated savings of about $1 billion per annum in its fuel import bill of nearly $15 billion, said the ADB spokesperson. The project will help avoid up to 2 million tons of greenhouse gas emissions a year.
Since 2008, Pakistan has been suffering from crippling power shortages, caused by a lack of fuel, which has resulted in unscheduled industry shutdowns, power interruption in cities and public unrest.
The country’s natural gas resources are also under severe strain with a recent survey showing that the rate of gas extraction is declining by over 2% a year, even as demand accelerates, said the ADB.
Regasification converts LNG into natural gas, making it easier to store and distribute through pipelines to end-users including power generators.
The ADB said it was working closely with the government to attract private sector capital into the energy sector, and has helped finance the country’s first two private hydropower projects and first three private wind power projects.
Published in The Express Tribune, February 28th, 2015.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
International assistance: ADB approves $30m loan for LNG terminal – The Express Tribune
The Asian Development Bank (ADB) has approved a $30 million project loan for Engro’s Elengy Terminal Pakistan Limited for the construction of the country’s first liquefied natural gas (LNG) regasification terminal.
The Manila-based lending agency approved the commercial loan days before the LNG terminal is set to start operations. The company is negotiating two other loans to meet the total project cost of $133.3 million. Work on the LNG terminal was completed by arranging bridge financing from commercial banks.
Engro is expected to receive $20 million from the International Finance Corporation and another $50 million from local banks, according to a press release issued by the ADB’s country office.
The rest of the project financing will come from equity proceeds of $33.3 million, it added.
Pakistan urgently needs to utilise its existing power generation capacity fully, while reducing reliance on costly imported diesel fuel for electricity generation, said Mohammed Azim Hashimi, an investment specialist in ADB’s Private Sector Operations Department.
He said the regasification of LNG will allow power generation facilities to reach their maximum potential, using a cleaner and more efficient fuel, and will support the country’s push for greater energy security and diversification.
The loan, to the special purpose unit of listed Pakistani company, Engro Corporation, will be used to build and operate the regasification facility at the Port Qasim, Karachi.
The plant will have regasification capacity for up to 3 million tons of LNG per annum from March onwards. The fuel, suitable for use at most of the country’s combined-cycle power plants, will be supplied to state-owned Sui Southern Gas Company’s (SSGC) gas distribution network via a new high-pressure pipeline.
Following a public tendering process in 2013, ETPL signed a 15-year LNG service agreement with SSGC. ETPL would provide LNG handling facility with toll charges and later increase imports to 400 million cubic feet per day (mmcfd) from 200 mmcfd in the beginning.
At present, the government is negotiating an LNG supply deal with Qatar. Additionally, private parties are also arranging supplies and would use Engro’s LNG terminal.
Multiple uses
The LNG consumption will help the government make estimated savings of about $1 billion per annum in its fuel import bill of nearly $15 billion, said the ADB spokesperson. The project will help avoid up to 2 million tons of greenhouse gas emissions a year.
Since 2008, Pakistan has been suffering from crippling power shortages, caused by a lack of fuel, which has resulted in unscheduled industry shutdowns, power interruption in cities and public unrest.
The country’s natural gas resources are also under severe strain with a recent survey showing that the rate of gas extraction is declining by over 2% a year, even as demand accelerates, said the ADB.
Regasification converts LNG into natural gas, making it easier to store and distribute through pipelines to end-users including power generators.
The ADB said it was working closely with the government to attract private sector capital into the energy sector, and has helped finance the country’s first two private hydropower projects and first three private wind power projects.
Published in The Express Tribune, February 28th, 2015.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
International assistance: ADB approves $30m loan for LNG terminal – The Express Tribune
