Thursday August 18, 2022

Private sector demands uniform RLNG transportation tariff

December 11, 2020

ISLAMABAD: Private sector on Thursday urged the government to treat it on a par with public companies when it comes to tariffs for transporting regasified liquefied natural gas (RLNG).

Representatives of textile, compressed natural gas (CNG) and fertiliser sectors maintained this viewpoint during Oil and Gas Regulatory Authority’s (Ogra) public hearing on determination of transportation and distribution tariff for shippers FY2021.

Ogra was pleaded to direct Sui Northern Gas Pipelines Limited (SNGPL) to charge equitable transportation tariffs from public and private sectors.

SNGPL asked for times-high tariff from the Ogra for private sector against what it charges from the public companies, including Pakistan LNG Limited.

The private sector’s interveners included JS Global, All Pakistan Textile Mills Association (Aptma), and All Pakistan CNG Association.

They argued that if the shippers were allowed to charge higher transportation tariff from the private sector compared to public sector, then it would be discrimination and also discourage the private LNG import.

A SNGPL official feared that if Ogra gives decision of charging uniformed tariff, then consumers could shift to the third parties. SNGPL has been operating on ring-fenced regime based on supply of indigenous and imported gas.

Arsalan Ahmed, an official of JS Global said the current mechanism of transportation proposed by gas the utility would make it difficult for the private sector to import gas.

“If there is difference in transportation tariff, then government should have to give subsidy. Of course, the industry should be auditable,” Ahmed said.

Saqib Aziz, a representative of Fatima Fertilizers questioned the SNGPL’s demand for high tariff.

“There should be a level-playing field for the private and public sectors. There should be no discrimination. Market should be open for private sector,” Aziz said.

Ghayas Paracha, CEO of United Gas Distribution Company said the company has been doing efforts to import LNG for the last four years, but various hurdles were created.

“This is discouraging the local businesses and foreign companies that want to invest in the country,” said Paracha.”Tariff should be same for both private and public sector’s importers.”

Paracha sad gas distribution companies are asking for huge insurance fee from third party importers.

“Ogra should remove the head of legal professional charges claimed by the SNGPL,” he said. “We have never seen such thing in the world where the companies are operating in LNG and gas business.”

Shahid Sattar, who was representing Aptma asked the regulator for final decision and not provisional.

“Temporary decision will make it difficult for the LNG importer to recover dues form consumers,” said Sattar. “Textile sector is interested in LNG import as its demand is around 350 million metric cubic feet per day. If the full and final decision is not issued, it will be difficult for textile businesses to recover dues on products after they are exported. We want that private sector must be facilitated in LNG import.” The government has already notified a framework for the import of LNG by private parties and sanctioned excess capacity available at LNG terminals to private importers.

Currently, two state-owned companies, Pakistan State Oil and Pakistan and Pakistan LNG Terminals Limited, are engaged in LNG imports.

December and January see a sharp spike in demand for gas, while this year the demand-supply gap will be greater on the back of higher consumption and diminishing indigenous supply.

SNGPL that feeds Punjab, Khyber Pakhtunkhwa and Kashmir would face 300-350 mmcfd in peak winter season. The government also expects 250-400 mmcfd of gas shortfall in the Sui Southern Gas Company system in the coming winters.