LAHORE: The Ministry of Law and Justice has appointed arbitrators to resolve the issue of $30 million penalty imposed on the Pakistan GasPort Consortium Limited (PGPC) by Pakistan LNG Terminal Limited (PLTL) for allegedly delaying completion of the country’s second LNG terminal at Port Qasim.

The law ministry appointed the two arbitrators — one each from PLTL and PGPC — after both the parties invoked the relevant clause of dispute resolution in the contract.

The PGPC is constructing the country’s second LNG terminal in private sector after Engro. The project is close to completion. Though the project, under the timeline, was supposed to be commissioned in July this year but it could not happen. Following the delay, PLTL – a public sector company owned by the Ministry of Energy (Petroleum Division) – imposed $30m fine on PGPC which the latter declined to pay, claiming it was not responsible for the delay.

“Our claim ($30m) is based on facts and it is our right to get it from the PGPC under the agreement. Since the PGPC declined to pay and invoked the agreement’s dispute resolution clause, we also did the same,” said a senior official of the Petroleum Division. “If the issue is not resolved within the ambit of the agreement, PLTL and PGPC have right to knock the door of London Court of International Arbitration (LCIA),” he added.

According to the official, the first meeting of the arbitrators along with the officials concerned is likely to be held within this month. “The issue should be resolved in a few meetings otherwise both the parties must know about the proceedings in LCIA, which are very expensive in terms of hiring of international lawyers, travelling, meetings, lodging, boarding etc,” he explained.

The senior officials of the Petroleum Division and PLTL also seem determined to get the claim by all means whether through local or international arbitration, he maintained.

The PGPC also confirmed the development and expected resolution of the issue amicably under the agreement. “The representative we have nominated is a retired judge of the high court while the person nominated by the PLTL is an expert in dispute resolution,” a PGPC official told Dawn.

He said the terminal, which is in final stages of completion, would start functioning from November 28 – the day when the first consignment of LNG would reach Port Qasim.

He further claimed that the FSRU (Floating Storage and Regasification Unit), which has been hired by the PGPC to store and regasify the LNG, is already in Pakistan’s waters (near the Karachi Port) since Oct 1.

He added that the company will have to pay a huge fine ($200,000 per day approximately — effective Oct 2) to the company owning the FSRU for not utilising the facility. “It is now at PGPC’s disposal and as soon as the ship carrying LNG reaches Port Qasim, it (the FSRU) will also be there,” he added.

Published in Dawn, October 18th, 2017