In recent past, there have been high hopes attached to the deposits from Qatar. However, nothing concrete has been surfaced. The government intends to sell everything under the sun. Only practicable projects in the next 3-6 months, where some preliminary work is being done, are the sale of two RLNG power plants and the Energas RLNG terminal, in which Qatar Energy is the largest shareholder.
As they don’t trust the government, any investment would require having private partners and some type of implicit assurance from the establishment. Political instability, inconsistent policies, as well as government changes, make Qataris uneasy about working entirely with the government.
Qatar has been working on two projects. Both are associated with RLNG. The first is the sale of two RLNG plants. Nebras Power has done some research, and the agreement can be completed if the Qataris obtain the price they want. Previously, Pakistani officials attempted to remove this project from their presentation because, with assured returns reduced from 17 percent to 12 percent and the total risks of power sector circular debt, the government believes they won’t be able to get the correct price. And Qataris are only interested in a reasonable price that covers all of the risks linked with Pakistan.
Political and economic risks have reached so high in Pakistan that Qataris desire to get into a deal which is profitable for them. Political uncertainty is present anywhere the government is involved. To mitigate that risk, they seek informal endorsement from the establishment, believing that the establishment is the only consistent power in Pakistan.
Qatar politely denies any concrete package for Pakistan.
Political instability and change in policies along with change in the government is making Qataris uncomfortable to solely work with the government.
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On the economic side, there are various complexities involved which might prove to be disadvantageous for Qataris. The domestic private sector is knowledgeable and knows how to handle the situation. Everything in Pakistan is a mystery to them and they require the comfort. They believe that the private sector can provide them with clarity on business policies and tacit norms. Then, with skin in the game, the private player(s) will raise Qatari confidence.
They have an Energas LNG terminal project in which Qatar is the largest investor, and the project has been in the final clearances process for almost a year. In a first attempt, PDM champions travelled to Qatar and promised to shut the Energas project in exchange for cheap RLNG. Qataris politely reflected the reality to them. With Russia at war, everyone from East to West (except the United States) is looking for gas from Qatar, and Pakistan has presumptuously asked for a discount against an investment that Qatar has committed to Pakistan.
Seeing this, as well as the lower-than-expected price fetched from the privatization of RNLG plants, the government presented everything they could sell, from airports to hotels to terminals to solar projects. Qataris would not commit to anything without first conducting extensive research. As a result, these are long shots.
That is why, when the two countries met in the presence of important decision makers – Pakistan’s COAS and Qatar’s Emir – among all that was discussed, the only possible transactions in the next 3-6 months are privatization of RLNG power projects and the Energas LNG terminal.
Terminals and electricity projects are the low-hanging fruits belonging to RLNG. Pakistan is a growing importer of RLNG for Qatar. In the last five years, the country has purchased approximately 16-18 million tons of molecules. According to today’s pricing, the worth is well over $10 billion. The market is likely to expand in the future.