No local gas for CNG, fertiliser and private power sectors

ISLAMABAD: The government has carved out a plan under which private power houses, fertilizer and CNG sectors will not be allowed to use the local gas; instead they have been asked to utilise the LNG imported by PSO at higher price of $16-18 per MMBTU.
If the plan is implemented, the cost of electricity generated by RLNG-based IPPs will go further up, a senior official at ministry of petroleum and natural resources told The News.However, the LNG importing agency - PSO- which enjoys the solo right to import LNG, has purchased the second LNG vessel at higher price than that of the earlier LNG consignment without any tender, breaching the PPRA rules. The increase in margins of PSO, Sui Southern and Sui Northern, and inclusion of three more factors of gas exchange loss, pay and take penalty loss and revenue loss has factually increased RLNG price so high that it has become uneconomical for the private sector. The CNG sector has been told that it will get RLNG only for two days a week, and that too if there is surplus RLNG after meeting the requirement of the power and fertilizers sectors. The official said that this is tantamount to ruining the Rs3.5 trillion CNG sector.
Representatives of United Gas Development Company (UGDC), an umbrella company that looks after the affairs of CNG sector, have decided to approach Prime Minister Nawaz Sharif for direct import of LNG. The official said that UGDC would also seek PM’s intervention for saving the Rs3.5 trillion industry by allowing them to run the CNG outlets for 7 days a week on imported RLNG.
Ogra, the official said, has rejected the proposed plan and questioned the ‘transparency’ of the government with regard to the unjustified margins of importing agency and gas companies and questionable purchasing of LNG from open market at higher price. The plan will not serve the purpose as the three private sectors will not be able to cope with the steep rise in the price of RLNG,” the official argued.
The fertilizer companies and the CNG industry wants to import LNG privately but are not allowed. But the ministry has unjustifiably nominated the said three sectors to bring them under sub section ‘C’ of Clause 6.3 of LNG policy so that they could not utilise the local gas.
Clause 6.3 of LNG policy clearly says (a) For RLNG supply to SSGC and SNGPL, the RLNG price will be an input for determining the weighted average cost of gas in Pakistan, determined by Ogra, for GoP specified consumers and industry;
(b) The LNG developer/ LNG buyer will have the right to sell RLNG to end users directly based on a negotiated price; (c) SSGCL/SNGPL will not sell gas priced under 6.3(a) to industries which are selected by GoP to use RLNG from time to time.
The official said that in case the plan gets implemented then the CNG price will surge over Rs90 per kg and the RLNG parity with petrol will also increase up to 85 percent despite the fact that the government has announced the parity price would remain at 30 to 35 percent. This will ruin the CNG sector in Punjab, which employs 300,000 people.
For the CNG sector, according to the official as per Clause 6.3(b), we will have the right to sell RLNG to our consumers on a market-based price, which is relatively less, and the gas would be available 7 days a week.
The official said that the masses are being denied the use of clean fuel (RLNG) knowing the fact that for the last 6 months lead content has increased in the atmosphere as the vehicles use petrol and diesel as fuel since CNG sector is non-operational in Punjab for over 6 months.
The government has also decided to use the existing FRSU (floating re-gasification and storage unit) of EETPL as LNG carrier for importing LNG for two more times till June 11, 2015 indicating no progress in LNG import deal with Qatargas Company under government-to-government deal. Qatargas Company has linked the LNG deal with sustainable payment mechanism and dredging of channel up to 14 meters.