Govt set to allow CNG sector to import 600mmcfd LNG
Imported LNG to be used as CNG, will be sold in litres; price to be set by CNG stations; local gas to be used to generate 1,600MW electricity
Monday, August 04, 2014
From The News Print Edition
ISLAMABAD: In a major positive development, the government is all set to allow the Rs400 billion CNG sector to import 600mmcfd LNG in phases through private arrangement besides allocating 200mmcfd pipeline capacity for the sector in the first phase and 400mmcfd in the second phase.
“We are going to table the summary in the next ECC meeting that is most likely to be held on August 8 seeking approval for the pipeline capacity to transport re-gasified LNG to be imported by the CNG sector,” a senior official of the Ministry of Petroleum and Natural Resources told The News. “Once this project gets materialised, the gas will be available at the CNG stations for seven days a week round the clock.”
This means the CNG sector in Pakistan will emerge as the biggest LNG importer in the years to come.The CNG sector, the government official said, was hopeful of importing the LNG by March 31, 2015 replacing the local CNG. And the local gas being used by the CNG sector will be surrendered to the government that will use it either for the industrial sector or for power generation.
If the government opts to use the local gas, abandoned by the CNG sector, for power generation, then it would immediately be in a position to generate 1,600MW electricity. The official said the LNG price would be de-regulated and sold in liters and not in kilograms. The government or Ogra will have no role in fixing the price. The CNG sector will regulate the price on its own and maintain it at 25-30 percent parity with petrol.
The official said the CNG sector was going to ink a deal with Engro LNG terminal to import 200mmcfd LNG and 400mmcfd through other terminals being installed by other players under private arrangements.
“The Engro LNG terminal has the capacity to handle the import of 690mmcfd gas. However, the dependable capacity of Engro terminal exists at 600mmcfd gas, out of which the government wants to import 400mmcfd LNG while the remaining 200mmcfd will be imported by the CNG sector.”
The official said in a bid to bail out the government from the energy crisis, the CNG sector had carved out a plan to import 600mmcfd LNG in phases through foreign suppliers under the LNG policy 2011.
A confidential letter written by the All Pakistan CNG Association to Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi, a copy of which is exclusively available with The News, unveils the plan to import LNG serving the CNG sector.
Under the plan, this sector has made a Special Purpose Vehicle (SPV) with the name of Universal Gas Distribution Company Private Limited (UGDC). The UGDC will handle all the commercial agreements with gas utilities like the Sui Southern and Sui Northern and LNG suppliers and LNG terminal operators to secure a long-term agreement for LNG supply arrangements.
The UGDC will further be responsible for the entire project management and to handle the LNG distribution system thereby sparing the pipeline capacity in future for use by the gas utility companies.
The letter says the UGDC will need to get the gas marketing and distribution license from Ogra and a price deregulation policy. The plan mentions that the Punjab CNG stations will require 150mmcfd gas during the first phase against the bulk sale gas agreement to be inked between the UGDC and Sui Northern for an interim period of 18-20 months starting from the grant of distribution license to the UGDC till the projected supply through imported LNG is successfully commissioned.
Under the second phase, the CNG industry will import 200mmcfd LNG from the suppliers and distribute it to the CNG stations through the network of gas utility companies for 18-24 months until such time that the LNG terminal becomes operational.
The initial imported volume of 200mmcfdg gas will gradually be enhanced to 400mmcfd or as per requirements of the CNG market in the whole country. In the third and the final phase, after three or three and a half years, the UGDC will continue to import LNG off hook itself from the Sui utility companies’ pipeline network. The UGDC will build its own storage and distribution network of supply.