ISLAMABAD: The Asian Development Bank on Friday approved a loan of $30 million to Engro Elengy Terminal Company, which is building Pakistan’s first liquefied natural gas terminal at the Port Qasim.
The plant will start regasification of up to 3 million tonnes of imported LNG from next month. The loan is to be used to build and operate the regasification facility.
The fuel, suitable for use at most of the country’s combined cycle power plants, will be supplied to the state-owned Sui Southern Gas Company’s distribution network via a new high pressure pipeline.
Along with the ADB, the International Finance Corporation is expected to provide $20 million and local banks another $50 million. The rest of the project financing will come from equity proceeds of $33.3 million, for a total cost of $133.3 million, including contingencies.
ADB says that the regasification project is expected to set legal and financial benchmarks for similar projects in future.
Regasification converts LNG into natural gas, making it easier to store and distribute through pipelines to end users including power generators. The project will help avoid up to 2 million tonnes of greenhouse gas emissions a year.
The converted fuel will help the government make an estimated savings of about $1 billion per annum on its current fuel import bill of nearly $15bn.
It is anticipated that the project will contribute to national energy security priorities and strengthening of the country’s natural gas infrastructure.
“Pakistan urgently needs to utilise its existing power generation capacity fully, while reducing its reliance on costly imported diesel for electricity generation,” said Mohammed Azim Hashimi, an investment specialist in ADB’s Private Sector Operations Department.
“Regasification of LNG will allow 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,” he said.