The FINANCIAL — IFC, a member of the World Bank Group, is making an equity investment as well as providing a loan of up to $20 million to Engro Elengy Terminal Private Limited (EETPL) for Pakistan’s first Liquefied Natural Gas (LNG) import terminal, to help address the country’s severe energy crisis and spur economic growth.
IFC’s investment will go towards the design, construction and operation of the $125 million Elengy terminal at Port Qasim, near Karachi. The terminal utilizes a Floating Storage and Regasification Unit (FSRU) provided by U.S.-based Excelerate Energy, and is expected to handle up to 4.5 million tons of LNG every year, which will help ease the country’s crippling power shortages and reduce its reliance on expensive diesel and heavy fuel oil imports, according to IFC.
Khalid Subhani, CEO of Engro Corp said: “Importing natural gas is a more economically viable source for power generation, especially when Pakistan’s indigenous gas resources are diminishing. The new facility will also help diversify Pakistan’s fuel supply mix and open one of the largest gas markets in Asia to the global LNG market.”
Power outages are estimated to cost the equivalent of 7 percent of Pakistan’s GDP annually, with blackouts and brownouts lasting up to eight hours in cities and even longer in the countryside. According to the latest Enterprise Survey conducted in Pakistan, the absence of a reliable electricity supply was cited by two-thirds of business owners and managers as the top constraint facing firms in the country.
The project is part of World Bank Group and IFC strategy to mobilize up to $10 billion in investments to address Pakistan’s power shortage.
“Our aim is to help Pakistan’s private sector develop infrastructure that will ensure an affordable, reliable and sustainable energy supply,” said Mouayed Makhlouf, IFC Regional Director for the Middle East and North Africa. “This investment will develop a critical asset to help address the country’s severe gas supply deficit, cut fuel costs and mitigate climate change. We hope it will also encourage the development of additional LNG supply infrastructure in Pakistan and other developing countries.”
Pakistan represents IFC’s second largest country exposure in the Middle East and North Africa. To date, IFC has committed over $5.2 billion in the country. During the next few years, IFC is expected to invest about $500 million annually in Pakistan, with a focus on infrastructure, particularly renewable and low-cost power, financial markets, agribusiness, manufacturing, and services.