ECC likely to allow issuance of RLNG-based CNG licenses

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet, scheduled to meet today (Wednesday), is likely to allow issuance of RLNG-based CNG licences, as finance, planning, and industries’ ministries have backed the proposal, The News has learnt.

Following the government’s giving private sector a go-ahead to import LNG, the CNG and fertilisers sectors had applied for hiring capacity allocation on terminal-II that has been sitting idle over last couple of years.

In fertiliser sector urea manufacturers including Agritech Ltd and Fatima Fertilizer have applied for availing this facility.

“Yes we have applied and our target is to get this imported source of energy and apart from meeting local demand, we also want to export our products,” an Agritech Ltd official said while talking to The News.

Though he did not give any details, he was confident the company would soon be allocated capacity on terminal-II.

Special Assistant to Prime Minister on petroleum Nadeem Babar, while addressing a conference, organised by a body of CNG industry, had said import of LNG by private sector would reduce the import bill by Rs600 billion.

In a statement, Universal Gas Distribution Company (Private) Limited [UGDC] chief Executive Officer (CEO) Ghayas Paracha said that government could save Rs97 billion during next twelve years by handling 150 mmcfd additional LNG through second LNG terminal.

He appreciated the government for facilitating private sector to import LNG and said the duration of load shedding in winter season would be reduced if private sector was able to import LNG.

Paracha said it would not only help the CNG sector to get an economic boost, but would also enable gas companies to minimise load shedding in winter season.

Petroleum division said the Federal Cabinet in its meeting held on April 12, 2017, while considering a summary submitted by the ministry, had relaxed the moratorium on new gas connection based on RLNG. Therefore, the gas utility companies are now in a position to provide new gas connections, inter alia, to the CNG sector applicants based on the supply of RLNG.

Further, the private sector is now taking up the import of LNG to service the CNG sector and the burden on the government to ensure gas supply to this sector is also shifting. In addition, it is stated that CNG pricing, which was deregulated in 2016 by the government, now determined by market forces.

However, CNG is still cheaper than petrol in terms of MMBTUs.

Keeping in view of the facts stated, the Petroleum Division has proposed that permission to grant new CNG licences or RLNG may be accorded. Oil and Gas Regulatory Authority (OGRA) will incorporate in the ‘ terms and conditions’ that the licence is only for RLNG-based CNG and the licensee cannot claim for its conversion to indigenous gas.