The Pakistani government has also chosen to offer Qatar a 51% stake in New York’s Roosevelt Hotel and the country’s national airlines.
Qatar is set to provide $2 billion in bilateral assistance to Pakistan in a bid to alleviate the South Asian country’s financing shortages and its consequent risk of a default, a top official said.
Saudi Arabia and the United Arab Emirates will each also contribute $1 billion to Pakistan’s oil industry, Bloomberg reported, citing State Bank of Pakistan’s Acting Governor, Murtaza Syed.
The Pakistani official said in a briefing the funds are anticipated to be received over the course of a year.
The comments were made ahead of a visit to Doha by Prime Minister of Pakistan Shehbaz Sharif. The financial support “may or may not” be announced during his travel, Syed pointed out.
The financial assurances also come ahead of an International Monetary Fund (IMF) board meeting on 29 August that could potentially result in the disbursement of $1.2 billion worth of loans.
Arab countries had only agreed to help the South Asian nation once it secured an IMF programme, “while the Washington-based lender has been seeking a commitment from Saudi Arabia,” the report detailed.
The Pakistani rupee has outperformed all other currencies this month, according to data compiled by Bloomberg, rising 11% since hitting a record low last month as concerns about a potential default lessened.
Sharif is expected to land in Qatar on Tuesday to address liquified natural gas (LNG) supply shortages as the new administration in Islamabad tries to navigate through an economic crisis, with energy prices already soaring in light of the Russian invasion of Ukraine.
Sharif found himself in a gasoline crisis-hit Pakistan that has resulted in blackouts in several areas of the nation.
Reports have been surfacing about Pakistan potentially pursuing a 15-year LNG deal with Qatar on a G2G (government to government) basis that includes two cargoes per month with a reopening price clause after 11 years, according to a senior coalition government official’s statement to The News last week.
This is likely to be addressed during Sharif’s visit to the Gulf state.
This comes as reports say Pakistan is also expected to sell Pakistan International Airlines (PIA) shares in order to give over administration of the national flag carrier to Qatar or the UAE also on a G2G basis. Reports suggest the Islamabad Airport could also be handed over to one of the two nations for management.
“PIA has been running into huge losses for a long time and it will be sane to hand over its management to either Qatar or the UAE. And the Islamabad airport is also not running efficiently,” he said.
There is also a proposal to sell two regasified LNG-based (RLNG) power stations, Haveli Bahadur Shah and Balloki. The 1,223 MW Balloki combined-cycle gas-fired power station addresses Pakistan’s energy gap by becoming one of the most reliable power plants in the world.
The plant, which is efficient by more than 61%, began commercial operations in July 2018 and produces enough energy to power more than six million Pakistan-based households.
With an unprecedented efficiency of 62.44% on RLNG fuel, the 1,230 MW combined-cycle Haveli Bahadur Shah project is the most efficient power plant in the world.
Both appear to be priced at $2 billion, but this deal may not be practical because Pakistan has $450 million in equity in both projects, which may be sold to either the UAE or Qatar using loans obtained by the government for the projects.
Musadik Masood Malik, Minister of State for Petroleum of the Islamic Republic of Pakistan met with Qatar’s Energy Minister Saad Sherida Al Kaabi in Doha on Tuesday, where they discussed different means of boosting cooperation between Pakistan and Qatar in the field of energy.
Qatar’s LNG terminal investment
Meanwhile, the coalition government has removed all of the obstacles that had slowed the construction of four LNG terminals during the PTI government’s tenure, a senior Pakistani official told The News on Monday.
“Ahead of prime minister’s visit to Qatar, the ECC has amended the LNG Policy 2001 for exemption from mandatory Third Party-Access (TPA) to new LNG terminals to ensure sizeable foreign direct investment from Qatar in the Energas Terminal,” said the official.
Pakistan currently has the capacity to import 1.2 billion cubic feet per day of LNG. However, due to dwindling local gas reserves by 9-10% per year, the country’s immediate gas demand is 3 bcfd, while its constrained demand is 6 bcfd.
Pakistan’s only option is to increase its reliance on imported gas until a large discovery like Sui Gas is made.
Energas Terminal is the proposed fourth terminal, with 49% FDI from Qatar. Pakistani shareholders in the Energas Terminal include Lucky Group, Sapphire Group, and Halmore Power.
Qatar is the project’s single largest shareholder.
According to other official sources, the Qatari government complained to the previous government about a significant lack of progress on their terminal development. A level playing field at ports, pipeline capacity from Sui companies, and enabling regulations at the OGRA level were among the issues raised by Qatari leadership.
Once completed, the new terminals will be operated without any offtake guarantees or capacity payments from the Government of Pakistan. Tabeer Energy, Energas, Pakistan Gas Port Consortium Limited (PGPCL)-2, and GEI Pakistan are among the four new LNG terminals.
“We have removed all the impediments and fully facilitated the investors. Now, it’s up to them how fast they develop the LNG terminal facilities. All the new LNG operators will arrange LNG supply on their own and sell it to the private sector after regasification. However, they will use the gas pipeline infrastructure for transportation of their product to their clients,” the official said.
The PM’s trip this week will be an important litmus test for the new government in determining whether it can facilitate much-needed Qatari investment in Pakistan.
Qatar has reportedly requested a number of items, including the ECC decision on regulatory clarity.
“If this chance is missed, Pakistan may not be able to develop a terminal for the next many years and will be hounded by a significant shortage of gas,” sources told The News.
Qatar has already received regulatory approval to secure the company’s shares, but it is still waiting for approval from the three ministries of Petroleum, Maritime, and Finance, on outstanding items.
Officials hope that all of these issues will be resolved before the prime minister’s visit to Qatar this week.