LPG filling and selling: PPL puts at risk its Rs200 bn facilities, people’s lives

ISLAMABAD: State-owned oil and gas companies are risking public assets worth billions of dollars and lives of consumers by refusing to sell Liquefied Petroleum Gas (LPG) as ordered by the regulator.

The News has learnt about an unprecedented accident, where an LPG bowser cracked open during filling at the Adhi Gas Field in Rawalpindi district a week back. An officer of the producer told this correspondent that the bowser had to remain stationed at the PPL-operated facility with highly inflammable LPG oozing out for two days.

Spillage from the bowser posed a serious threat to the safety of over Rs200 billion facility, but the field managers could only attend to the senior management’s desire to keep it under the wraps.

However, when contacted, PPL says that it is strictly following Ogra guidelines while filling and selling. And it also says that there was no crack in the bowser. However, it acknowledged at the same breath saying when filling was about to complete, a pin hole was observed at the bottom. Immediately the bowser was decanted back into the system, through decanting pumps.

PPL also says that it was not reported to Ogra as there was no crack and only minimum release to the environment, hence no procedural requirement to report it to Ogra. However, it was reported to the PPL HSE system. It further says that pin hole leakage and passing valves issues happened in the past. However, frequency is much less.

However, the official sources at Petroleum Ministry stressed saying that the incident ought to have been reported to the Oil and Gas Regulatory Authority but a relevant authority official said he had only heard of the incident. The authority was said to be making inquiries to ascertain the nature and cause of the incident 10 days later on Thursday.

“Nothing has been reported to us by Pakistan Petroleum Limited or the LPG marketing company, whose bowser was being filled,” the Ogra official said.

The Ogra official said he could not comment on the accident until the relevant information was made available to the authority, but confirmed that such an accident did put the entire facility and all personnel present at grave risk.

The accident at Adhi Field comes on the heels of a campaign by LPG Industries Association of Pakistan where a report of the Punjab IG is cited to state that there have been 79 accidents involving explosions of LPG cylinders in the last six months in the Punjab alone. As many as 46 people lost lives in such explosions and 198 were injured, mostly with burn injuries.

The LPG Industries Association of Pakistan insists that small industries that fabricate substandard LPG cylinders are causing four to six accidents in a day, some of those leading to deaths or life-long disabilities.

The LPG industry has been mired in controversy since public sector producers have refused to comply with a 2018 Ogra decision requiring that the producers should comply with the LPG Production & Distribution Policy of 2016 and desist from sales in violation of the policy provisions.

Pakistan Petroleum and OGDCL moved the Islamabad High Court in separate appeals against the Ogra decision and also obtained orders against enforcement of the Ogra decision of June 2018. The decision appealed against and suspended by an order of the High Court required that public sector LPG producers sell LPG to companies that offer the deepest discount to consumers in competitive bidding of LPG supply contracts.

Producers, including OGDCL and PPL, which have been accused of regulatory capture in the last two decades, wish to sell LPG on their own terms even if opposed to LPG policy and the applicable rules.

While the OGDCL has managed to stay out of any controversial transactions, PPL has been on a rampage resorting to ad hoc sales contrary to the Council of Common Interest-approved policy provisions by resorting to sales on “first come first served” basis in a manner that has been alleged to be non-transparent.

The LPG Policy of 2016 clearly prohibits non-transparent sale of LPG by producers and specifically requires competitive bidding. The PPL insists on “first come first served” basis that has no element of competition.

Ad hoc sales of small quantities over a period of four days to a week have led to LPG landing in the hands of companies with inadequate infrastructure. Such short-term supplies in ad hoc sales have resulted in buyers compromising on safety standards by resorting to distribution in cheaply acquired substandard cylinders.

“We do not even know who is buying and selling LPG anymore,” said Raja Aziz, a LPG distributor in the suburbs of Rawalpindi. “Ad hoc supplies being made out of Adhi and some fields in Khyber Pakhtunkhwa are the reason for such criminal compromise on safety standards,” says Aziz, hoping that senior management of public sector oil and gas companies will be held to account in this regard one day.

When asked for comments, a senior official of the Petroleum Division said government officials were also gravely concerned about the mismanagement of LPG assets by the state-owned companies. “What we find most perturbing is the rising rate of accidents and the resulting threat to consumer safety,” he said.

PPL, however, says that approximately 10 to 15 companies are lifting LPG based on transparent bidding system. “It is rare that companies own the bowser fleet. Most of them are third party vehicles, meeting licencing requirements. PPL has thorough vehicle inspection checklist as per approved procedure.”

To a question, PLL said that LPG tendering committee is responsible for managing current mechanism due to stay by LPG companies, on bidding in the court. All the companies, which get allocation are having valid Ogra licence, meeting all legal requirements for purchase of LPG.