ECC extends agreement of Saindak Copper-Gold Project

ISLAMABAD: The government on Wednesday approved pricing guidelines for the supply of Regasified Liquefied Natural Gas (RLNG) to K-Electric along with amendments to the existing legal framework and extended agreement with Saindak Copper-Gold Project with existing Chinese contractors for another 15 years.

These decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Shaukat Tarin that also authorised the issuance of a sovereign guarantee or standby letter of credit (SBLC) worth Rs6.944bn as operational Viability Gas Fund for construction of Sialkot-Kharian Motorway on build-own-transfer basis.

The ECC approved a summary of the Ministry of Energy on the determination of RLNG sale price for the supply of 150 million cubic feet per day by Pakistan LNG Ltd (PLL) to KE. This removes a key hiccup to operationalisation of KE’s new 900MW power project whose first of the two units is ready for generation.

Under the decision, the ECC approved amendments to the Second Schedule of Petroleum Products (Petroleum Levy) Ordinance and policy guidelines for RLNG pricing which would now be issued as Statutory Regulatory Order also approved by the ECC.

Now, the Oil and Gas Regulatory Authority (Ogra) would determine the sale price of RLNG on the basis of LNG delivered ex-ship price as per the contract signed by the PLL and KE as per the existing guidelines. The two sides (PLL and KE) had signed the RLNG supply contract about two years ago.

While finalising the RLNG price, Ogra would also accept PLL’s LNG import-related costs, port charges at actual and PLL’s margins as per the existing arrangement. All the charges under the Operation Services Agreement including but not limited to capacity charges, utilisation charges of the terminal as well as retainage and terminal management fee would also be taken at actual as per the existing guidelines.

SAINDAK: The ECC also approved a summary of the Petroleum Division for extension of the lease contract between Saindak Metals Ltd (SML) and Metallurgical Construction Corporation (MCC) of China for Saindak Copper-Gold Project for another 15 years i.e. until Nov 1, 2037. The ECC also recommended a review of the financial aspect of the project annually by the professional expert agencies.

SML is a 100pc public sector entity of the federal government responsible for managing affairs of Saindak Copper-Gold project in District Chagai, Balochistan. The project was developed for local ore exploration, mining and processing to blister copper. The centre invested about Rs30bn in the project over a long period of time since late Z. A. Bhutto’s tenure and later declared an Export Processing Zone (EPZ) up till Oct 31, 2022.

The Chinese state-owned MCC has been running the project on lease since November 2001. The Musharraf administration extended the contract for 10 years with effect from Oct 1, 2002 on publicly unavailable mutually agreed terms. The contract was extended twice in 2012 and 2017 for five years each that now expires on Oct 31, 2022.

The Petroleum Division constituted another committee represented by ministries of finance, law & justice, petroleum, FBR, the provincial government, SML and ISI to negotiate the terms & conditions of the contract extension with MCC for the development of Eastern Ore Body.