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December 14, 2018

Government allows private sector to import LNG

Business

December 14, 2018

ISLAMABAD: Government on Thursday allowed private sector to directly import liquefied natural gas (LNG) to meet energy demand, a move that would end the monopoly of the state-owned enterprises over multimillion dollars imported fuel market.

The Oil and Gas Regulatory Authority (Ogra) approved the gas network code (NWC) for use of gas pipelines of Sui Southern Gas Company and Sui Northern Gas Pipelines Limited by any third party.

But, they have to take licences from the Ogra and other relevant authorities and would have to pay the pipeline use charges to the companies.

Under the new code, compressed natural gas, textile, fertiliser and other sectors could import LNG, re-gasify and inject it in the gas pipelines system for supply nationwide.

Currently, state-owned companies are importing LNG, which is regasified through terminals set up by the private sector.

Currently, there are two LNG terminals operational at Port Qasim that handle imported LNG with a combine re-gasification capacity of approximately 1.2 billion cubic feet of gas per day (bcfd), but the current handling is less than one bcfd. LNG import has reached seven million tons a year since launch of the first terminal three years back.

Ogra approved the network code submitted by gas utilities in pursuance to Rule 11 of Ogra Gas (Third Party Access) Rules 2018 with the objective of establishing a uniform contractual (operational) framework for the third-party access arrangements in the country and the use of gas pipeline transportation systems.

An official of the authority told The News that Ogra notified the third party access rules in June, but after the approval of the network code, “now anybody can import LNG and inject the re-gasified LNG into the system and can take it anywhere in the country”.

“Now, legally everything is open, nobody has monopoly,” the official said, requesting anonymity.

Ogra said opening up of the country’s gas market to third parties will promote import of LNG and facilitate growth in the natural gas sector of the country.

“The third party access (TPA) regime will address energy shortfall of the country, secure energy supplies for growing domestic demand and promote economic growth by enhancing competition in the gas market,” the authority said in a statement.

Industry officials said the new rules will promote the development of a competitive gas market by applying uniform principles to the relevant parties, ensure fair, transparent and non-discriminatory practices in all transactions concerning the use of the gas pipeline transportation systems, prevent abuse of dominance and any potential anti-competitive conduct, and ensure safe and reliable supply of gas, and integrity of the gas pipeline transportation system.

The network code is the common set of standard conditions governing access arrangement between the transporters and shippers, including gas transmission licensees and distribution licensees, and gas sale and connected system operators.

Ogra reviewed the third party access rules and divided them into two parts: rules/guidelines and network codes in the backdrop of gas sector reforms. The code was formulated in consultation with the stakeholders.

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