Punjab to get up to 80pc more gas for domestic consumers in next winter

LNG deal with Qatar

Injection of 400 mmcfd LNG into transmission, distribution system next month to stimulate economy; govt to have additional tax revenue of Rs8-10 billion a year; country to save $1 bn when power plants will run on RLNG

ISLAMABAD: Gas availability for domestic sector in next winter will increase up to 80 percent in the Punjab and other sectors of economy, including power, industrial and fertilizer, will also get gas exposing the country to a new surge in economies activities.

Currently for domestic consumers, gas availability stands at 60 percent, but in next winter season it will go up to 80 percent providing substantial relief to domestic consumers who have been experiencing irritating gas load shedding for the last one decade.

So much so, an injection of 400 mmcfd LNG into Pakistan’s gas transmission next month and distribution system will immediately stimulate economy, particularly the large scale manufacturing (LSM) sector resultantly adding tax revenue of Rs8-10 billion a year, Federal Minister for Petroleum Shahid Khaqan Abbasi told The News.

Three LNG ships will be arriving in March from Qatar under g-to-g mode and one will be arranged by Gunvor Company under a five-year tender arrangement.  Four LNG carriers will bring 400 mmcfd LNG at the cost of 13.37 percent of the three months average price of Brent.

This will cater, the minister said, to 20 percent of energy needs of the country and in next winter gas availability for domestic sector will not only increase up to 80 percent, but it will also be available for power, industrial and fertilizer sector. So much so, the CNG sector will also be supplied gas depending upon its availability.

And if the diesel-run power plants are provided the RLNG, Pakistan will be saving $1 billion a year and if the efficient power plants being run on furnace oil are switched to the RLNG, then the country will be having the benefit of $400-500 million a year, the minister said and added that with the provision of RLNG to fertilizer sector, Pakistan will be in a position not to import fertilizers as it will be easily able to produce enough fertilizer to cater to the local demand.

Currently, Pak-Arab and Dawood Hercules are using the RLNG and the government is also trying to provide the RLNG to Agritech Daudkhel so that Pakistan’s dependence on import of fertilizers could be done away with.

To a question, the minister said the government had multiplied its efforts to deregulate RLNG before the end of current month to ensure smooth transactions of four LNG consignments (three from Qatar and through Gunvor company) that Pakistan would start receiving from March onward at the price of 13.37 percent of the Brent. 

The LNG consumers are ready to pay the full cost of the product and the government also wants the RLNG business in the country based on market forces mechanism. 

The minister said RLNG will not impact the common consumers. The ministry is currently in the process to make a summary for the ECC seeking deregulation of RLNG prices.

“We do not  want any role of Ogra in the RLNG prices determination as keeping in view the market forces mechanism, the RLNG price would be determined between the gas companies and the RLNG buyers. We are taking, the minister argued, the step only to ensure payments with 15 days’ time to LNG cargoes.”

He said furnace oil and diesel products were also deregulated and both were being used by the power sector. And the fuel is passed on to consumers. Likewise the RLNG cost in power generation will also be passed on to consumers. To a question the minister said the RLNG cost will be hovering between 3 to 3.5 cents per unit.

The minister said the existing gas transmission and distribution was being augmented and to this effect the Rs140 billion gas pipeline was being laid down by December 2016. 

Out of Rs140 billion, he said, a loan of Rs101 billion will be managed from banks and Rs101 billion will be reflected in the price of RLNG. Only the RLNG consumers will pay the loan of Rs101 billion in shape of RLNG price, he added.

Once the said pipeline is laid down, the swap system will be done way with, as the dedicated pipeline will carry 1.2 billion cubic feet RLNG that will cater to the needs of RLNG consumers of the Punjab. 

The existing RLMNG will also be injected to the dedicated pipeline. The minister said the government had carved out a plan to establish and make operational the second LNG terminal with the capacity to re-gasify 600 mmcgd LNG by March 2017. 

This will cater to the needs of three LNG-based 3,600 MW power plants being set up in the Punjab. Apart from it another people line from Karachi to Lahore will be laid down by Russia.

The government will install four LNG terminals by December 2017 in toto in addition to the existing one. The five terminals will be having the capacity to import  2.9 billion cubic feet LNG per day.

All the terminals will be set up with leased FSRU (floating storage re-gasification unit) having levelised tariff tolling model. Once all the five LNG terminals come on stream, Pakistan will be in a position to import LNG enough to meet the current deficit of gas that stands at 2 billion cubic feet per day gas. 

This will not only help bring down power tariff in the country, but would also reduce the cost of doing business that will give impetus to economic activities in the country.

Out of the proposed five LNG terminals, one terminal by Engro at Port Qasim having capacity to import 600 mmcfd LNG with tolling fee of $0.66 per MMBTU has already been set up which is operational since March 26, 2015. 

Three LNG terminals will be set up each with the capacity to import 600 mmcfd LNG and the last one will be established with the capacity to import 500 mmcfd LNG.

The Government Holding Pubic Limited (GHPL) will establish two terminals each having capacity to import 600 mmcfd LNG at Port Qasim most probably in LNG zone. The said LNG terminal is scheduled to be completed by December 2016. The GHPL will also install a terminal of same capacity by converting SSGC LPG terminal into LNG terminal which is to be completed by March 2017.  

The fourth terminal of 600 mmcfd will be installed by Bahria Foundation, Poly Technologies, Pak-Arab Refinery Company and GHPL at Somiani near Karachi. 

The said terminal will be completed in December 2016 by the joint venture of four companies. And the fifth one will be set up at Gwadar with capacity to import 500 mmcfd LNG by Inter State Gas System and China Petroleum Pipeline Bureau. The terminal at Gwadar will be completed by December 2017.