Govt to limit its role in LNG industry: Babar

Will support private-sector players, provide access to pipelines and terminals

ISLAMABAD: Liquefied natural gas (LNG) has been a source of lucrative business ever since the Pakistan Muslim League-Nawaz (PML-N) government initiated deals in the sector.

However, now the Pakistan Tehreek-e-Insaf (PTI) administration has backed out from the plan of extending its footprint in the LNG industry while further opening the field for the private sector.

At present, all LNG supplies are in control of government entities, with Pakistan State Oil (PSO) importing 500 million cubic feet of LNG per day (mmcfd) from Qatar and 100 mmcfd through Gunvor.

Apart from that, Pakistan LNG Limited (PLL) is importing 200 mmcfd of LNG through Gunvor and Eni. Pakistan has two LNG terminals with handling capacity of over 1.3 billion cubic feet per day (bcfd).

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The previous PML-N government had inked a 15-year LNG deal with Qatar, which was criticised by the ruling party. But the PTI government had also planned to strike another LNG deal for the import of an additional 200 mmcfd from Qatar, which sparked controversy and caused concern in the private sector.

Speaking at an LNG conference on Friday, Special Assistant to Prime Minister on Petroleum Nadeem Babar announced that the government would not continue its footprint in the LNG industry.

He said the government had decided that it would not continue to further its work in the LNG industry and with that mind "we went ahead with the plan of opening access to pipelines and terminals and there is no bar on setting up LNG terminals by the private sector."

The government would support private-sector players if they had buyers, suppliers and the financial muscle, he said and told the participants, "We create the environment… you do the business and compete with the public-sector entities."

He said the government was working on an integrated energy plan to meet the country's needs for the next 25 years. "We are working on a completely integrated energy plan for the next 25 years with the aim of ensuring availability of electricity, oil and gas to the consumers at affordable rates and in sufficient quantity."

The conference, organised by Energy Update - a trade magazine, was aimed at addressing the issues related to Pakistan's energy requirements and determining the role of LNG to bridge the energy shortfall in an efficient manner.

Babar underlined the need for overcoming the energy shortages and providing commodities at affordable rates besides stopping their wastage. "Make energy cheaper and consumption will double," he said, adding that the strategy would give a substantial boost to the industrial sector and economic activities in the country.

Under its ease of doing business plan, the special assistant said, the government had removed a number of bureaucratic hurdles to facilitate private sector in the energy sector. He said the government intended to shrink its footprint in the energy sector by encouraging the private sector to compete with government entities.

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Over the past 16 months, Babar said the government had taken a number of steps that would have a positive impact on the energy sector in the coming years, but "we are not realising these measures right now. We have been living in the past and denying the present…but we have to move the energy sector where it has to be."

Commenting on the energy outlook, he said there would be a drastic increase in electricity share in the overall energy pie in the next 10 to 20 years. He also highlighted the role of renewable energy to meet the country's electricity and petroleum-sector requirements.

He pointed out that the traditional coal technology had gone out of fashion and "my prediction is that in 20 years oil will be out of fashion completely and gas will be left."

In the next 30 to 40 years, gas will mostly depend on fossil fuel, which supplemented the variability of renewable energy and "of course battery technology can change that and we will see major developments in the battery technology in the next 10 years."

Since the PTI government came to power in August 2018, the special assistant to the PM said, he had kept hearing about capacity shortages in different sectors. However, "I came to the conclusion that we really do have capacity constraints in most of our sectors but high level of inefficiency and protected structures are the main reasons."

He stressed the need for getting out of this mode, adding "our LNG sector is highly inefficient…we need to make it more efficient to lower the cost…We need to open up the oil and gas sector and bring down the commodity rates for the benefit of common man."

Published in The Express Tribune, February 1^st, 2020.

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