October 18, 2018 / 4:06 PM / a month ago

UPDATE 2-New Pakistani government seeks to renegotiate LNG terminal deals - minister

(Updates with Engro statement)

By Asif Shahzad and Kay Johnson

ISLAMABAD, Oct 18 (Reuters) - Pakistan’s new government will renegotiate agreements for two liquefied natural gas (LNG) import terminals, the country’s petroleum minister said on Thursday, part of a wider investigation into deals struck by the previous government.

Petroleum Minister Ghulam Sarwar Khan said the government of ousted premier Nawaz Sharif agreed to pay too much to Pakistan’s Engro Corp Ltd for at least one of the terminals.

“The decision is that this will be renegotiated with the parties,” Khan told reporters on Thursday.

Engro did not address the prospect of renegotiation in a statement late on Thursday.

It responded to the minister’s suggestion of impropriety by saying the bidding for the contract was done “in an auditable and transparent manner”, adding that LNG imports helped ease Pakistan’s crippling electricity shortages.

The rapid adoption of LNG infrastructure made Pakistan one of the industry’s fastest-growing markets in Asia, sparking interest from the world’s major energy producers and traders.

Engro, Pakistan’s largest listed conglomerate, built the country’s first LNG terminal in 2015 and has said it will begin building another one starting in early 2019.

It was not immediately clear if both LNG contracts the petroleum minister spoke of were with Engro, though it was the only company he named. Pakistan has two operational LNG terminals, one built by Engro, and several more planned.

Prime Minister Imran Khan’s government came to power in July, riding on a wave of anti-corruption rhetoric.

Sharif was sentenced to 10 years in prison this year following his removal from office by the Supreme Court. His party denies all charges of corruption while it was in power from 2013.

Petroleum minister Khan made no direct claim of corruption in the LNG deals but said the contracts gave a maximum return on equity of up to 44 percent, which he said was far above the industry standard.

He implied that the government would take further action if it is not satisfied with future negotiations with Engro.

“We will renegotiate with them, will sit with them, will talk with them, and...if it doesn’t work, then there are other remedies, which will be considered,” he said.

Sharif’s former petroleum minister, Shahid Khaqan Abbasi, who became prime minister after Sharif was removed from office, is currently under investigation by the state anti-corruption body over an unnamed LNG deal.

Abbasi, who led Pakistan’s push to develop LNG infrastructure to end electricity outages of up to 12 hours per day, denies any wrongdoing.

Party officials say corruption cases against Sharif and other officials are a conspiracy by the judiciary and military to bring down their previous government.

The army and courts deny any interference in politics. (Writing by Kay Johnson Editing by Alexandra Hudson and Kirsten Donovan)

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