SSGC asked to utilise idle capacity of LNG terminal

ETPL is currently handling 400 mmcfd against capacity of 600 mmcfd

ISLAMABAD: The federal government is pressing Sui Southern Gas Company (SSGC) to enter into an agreement with Elengy Terminal Pakistan Limited (ETPL) to utilise the remaining capacity for handling imports of liquefied natural gas (LNG), an official said.

At present, the terminal operated by ETPL at Port Qasim has the capacity to re-gasify 600 million cubic feet of LNG per day (mmcfd). It is processing 400 mmcfd according to an agreement with the government and could utilise the remaining volume for the private sector.



On behalf of the government, state marketing company Pakistan State Oil (PSO) is importing 300 mmcfd from Qatar and 100 mmcfd from Gunvor.

“ETPL has an unutilised capacity of 200 mmcfd since the start of operation in March 2015, which has put an extra burden on gas consumers,” an official said, adding the levellised tariff of the company was 66 cents per million British thermal units (mmbtu) but it could go down to 45 cents if the entire 600mmcfd capacity was utilised.

So, the consumers are paying around 20 cents per mmbtu in additional charges.

According to the official who is aware of the developments, the government has now decided to put to use the unutilised capacity and SSGC is under pressure to cooperate in this regard. The decision was taken in a high-level meeting on May 17, 2016.

However, SSGC, which is a state-owned company, could not consume this capacity without inviting bids from interested parties.

After the commencement of LNG terminal operation, ETPL faced a controversy, leading to a probe by the National Accountability Bureau into the LNG services deal between SSGC and the terminal operator.

Now, ETPL and SSGC could get mired in another scandal if they inked any agreement for consuming the remaining capacity of 200 mmcfd.

The Oil and Gas Regulatory Authority (Ogra) had allowed 66 cents per mmbtu as terminal charges according to a decision of the federal cabinet. In this regard, the Ministry of Petroleum and associated companies entered into an agreement with ETPL for over 20 years.

As a result, ETPL billed government enterprises an effective tariff of $1.45 per unit in the beginning because of lower volumes starting with just 100 mmcfd in the initial months.



The ministry and ETPL were of the view that average levellised tariff would be 66 cents per unit and not a flat rate of 66 cents. The ECC in its last meeting decided that terminal charges of $1.45 per unit for initial flows should be taken from the LNG consumers.

“This is what the government has done to pump money into ETPL, rather than allowing private sector like textile and fertiliser industries to import LNG to fully utilise the terminal capacity,” the official said, adding that now the petroleum ministry was pressing SSGC to ink a deal with ETPL for consuming its remaining capacity.

Gas utilities - Sui Northern Gas Pipelines and SSGC - had also created hurdles in the way of utilising full capacity of the LNG terminal as they had earlier reported that they had the capacity to transport 300 mmcfd of LNG through their pipeline network. Now, 400 mmcfd is being transmitted through the pipeline system.

“The real issue is that gas utilities are receiving 17.5% guaranteed rate of return and want to continue to enjoy the monopoly on gas supply,” the official said, adding this was the reason they were not ready to allow the private sector to import LNG.

Published in The Express Tribune, June 22^nd, 2016.

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