Amid LNG availability crisis: Petroleum Division asked to restart JJVL LPG extraction plant

ISLAMABAD: Amid the impending LNG availability crisis in February, 2021 on account of backing out by UAE based LNG supplier (ENOC) of its commitment to provide an LNG vessel next month, the top management of Jamshoro Joint Venture Limited (JJVL) has asked the Petroleum Division (PD) to comply with the ECC decision by letting its LPG extraction plant resume operation.

“Once JJVL’s LPG extraction plants comes on stream, it will start catering to the energy needs of over 750,000 homes across Pakistan. And this will also help contain the increasing LPG prices that have surged a lot mainly because of huge deficit of piped gas (local gas and RLNG) in the country,” unfolds the letter of JJVL written on Monday (January 18, 2021) to Special Assistant to PM on Petroleum Nadeem Babar.

The letter also reminds that the ECC has already accorded approval to the start of JJVL plant and more importantly the federal cabinet also ratified the ECC approval. “But the JJVL plant is still not operational.”

The top JJVL management has asked the Petroleum Division to direct the Sui Southern to restart the supply of gas to JJVL plant on provisional basis till the final orders are issued by the Supreme Court on the A. F. Ferguson and Co (AFFCO) report.

The JJVL management also maintained that both the parties JJVL and SSGC will adjust their accounts, according to the sharing formula as approved by the Supreme Court, within 30 days of the announcement of the court order.

The letter also suggested to the Petroleum Division that SSGC and JJVL technical teams should meet on any technical issues related to the restart of the JJVL plants.

Earlier the JJVL management wrote a letter to Finance Minister Dr Hafeez Shaikh seeking implementation of the ECC decision on approval to restart the LPG extraction plant, also ratified by the federal cabinet.

According to the relevant officials at the Petroleum Division, the JJVL-LPG extraction plant has the capacity to produce 300-500 tons of LPG that accounts for 15 percent of total LPG supply in the country, and it is not operational since June 21, 2020 due to which the national kitty has suffered a loss of Rs3.2 billion until now.

“The LPG production by JJVL is enough to cater to energy needs of over 750,000 homes across Pakistan," the official said and added that with the closure of JJVL, 5,000 people have lost their jobs too.

The Sui Southern had stopped gas supply to JJVL and canceled its deal with the extraction plant on June 21, 2020 arguing that its agreement with JJVL was for a period of 18 months, which expired automatically after the Supreme Court of Pakistan verdict on December 4, 2018.

The management also submitted that the NAB has not given any restarting order. It also mentioned that NAB does not have any bearing on the working of JJVL plant.

Regarding the Petroleum Development Levy (PDL), the letter written earlier to finance minister cited a restraining order from the Lahore High Court for which the JJVL management is seeking an early decision of the Supreme Court and requested the federal government for help. “We have already provided an undertaking that in case JJVL is directed to pay the PDL, the company shall do so," the company said.

In the country, only 24 percent consumers have access to piped natural gas facility while 76 percent consumers have to rely on LPG and other fuels like kerosene oil, and wood. The closure of JJVL plant has not only deprived the country of 15pc of LPG production but will also cause the company a revenue loss of billions of rupees.