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ADB approves loan for regas terminal in Pakistan

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LNG Industry,

The Asian Development Bank (ADB) has approved a US$30 million project loan to Engro Elengy Terminal Private Limited, a special purpose company that is building Pakistan’s first LNG regasification terminal.

The loan, to the special purpose unit of listed Pakistani company, Engro Corp. Ltd, will be used to build and operate the regasification facility at Port Qasim, Karachi. 

The LNG plant will have the capacity for regasification of up to 3 million tpy of LNG from March 2015 onwards. The fuel will be supplied to the state-owned Sui Southern Gas Company’s gas distribution network via a new high pressure pipeline.

ADB said that converted LNG will help the government make an estimated saving of approximately US$1 billion per year on its current fuel import bill of nearly US$15 billion.

Power shortages

Since 2008, Pakistan has been suffering from crippling power shortages, caused by a lack of fuel, which has resulted in unscheduled industry shutdowns, power interruptions in cities, and public unrest. The country’s natural gas resources are also under severe strain, with a recent survey showing that the rate of gas extraction is declining by over 2% a year, even as demand accelerates.

Regasification converts LNG into natural gas, making it easier to store and distribute through pipelines to end users including power generators. The LNG project will also help avoid up to 2 million tpy of greenhouse gas emissions.

Along with ADB’s loan, International Finance Corp. is expected to provide US$20 million and local banks another US$50 million. The rest of the project financing will come from equity proceeds of US$33.3 million, for a total cost of US$133.3 million, including contingencies.

Mohammed Azim Hashimi, an investment specialist in ADB’s Private Sector Operations Department, said: “Pakistan urgently needs to utilise its existing power generation capacity fully, while reducing its reliance on costly imported diesel fuel for electricity generation […] 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.”

Adapted from press release by

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