The position as at the 13th of May is that the Pakistani government will complete the process of awarding second LNG terminal contract to the successful bidder during the on-going month after the requisite go-ahead from the board of directors. Akbar Associates were technically disqualified (despite being the lowest bidder previously), hence Pakistan Gas Port Limited won the bidding round as the lowest bidder (after having the advantage of having qualified the technical evaluation) and it is hoped that the Government will award the contract to the successful bidder in 10 days after the boards approval.
For the second LNG terminal, Bids were submitted by two parties, Pakistan Gasport Limited (consortium) and Akbar Associates (consortium), on February 26. After the contract is official awarded, it will be documented in the form of an LNG Services Agreement (LSA). While there is already clearance given by National Accountability Bureau (NAB) and the Public Procurement Regulatory Authority (PPRA) for the awarding of the contract have already given clearance to the concerned authorities to award the contract in accordance with the law.
Now, to answer your question, during negotiations there can be chance of a fall-out because companies are looking at how ENGRO suffered in the contract for the first terminal due to tax relief being denied to it by the government. Last year in April there was a controversy that the Federal Board of Revenue (FBR of Pakistan) was claiming that Engro’s LNG terminal was not entitled to a five-year income tax holiday and a relief in import duties. This would effectively mean that the promised blanket income tax exemptions in the LNG policy would not help ENGRO or any other similar LNG provider.
Now if everything goes well, it is well known that the project has to be implemented in 11 months at Port Qasim, and given that the contract has yet to be finalized in a fortnight, we are looking at a time shortage
Even the bid given to ENGRO for the first LNG terminal two years ago to build and run a liquid natural gas (LNG) terminal was offered with less than favorable investor terms with clauses binding the government to pay a penalty of $150,000 a day if there were construction delays, no protection by sovereign guarantees and the risk of any eventuality being transferred onto the investors. There was also controversy and debate over the ‘take or pay’ requirements