Experts see the Supreme Court’s decision in the gas infrastructure development cess (GIDC) case as a major breakthrough that will help kick off work on the stalled North-South Gas Pipeline by the public utilities.
The pipeline will pump imported gas from south to north to feed Punjab industries and will send positive signals to the companies planning to set up new liquefied natural gas (LNG) terminals.
In a recent judgement, the Supreme Court directed the federal government to take all steps to commence the laying of North-South Gas Pipeline within six months.
It was also decided that the funds collected on account of GIDC would be utilised to execute the Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project as soon as the laying of pipeline in Afghanistan reached the stage where work on Pakistan soil could conveniently start.
Funds will also be spent on the Iran-Pakistan (IP) gas pipeline as soon as sanctions on Tehran are no more an impediment.
In case no work is carried out on the North-South Pipeline within the prescribed time frame and on laying any of the two other major pipelines (IP and Tapi), though political conditions are conducive, the purpose of levying the cess shall be deemed to have been frustrated.
At the same time, the GIDC Act 2015 will become permanently inoperational and considered dead for all intents and purposes.
“So, the North-South Pipeline is the most feasible project for Sui gas companies for transporting the imported gas,” remarked an official.
Pakistan and Russia have been working on the LNG pipeline since 2015 but they have not been able to sign a commercial deal because of US sanctions on Russian companies.
Companies setting up new LNG terminals require the creation of pipeline capacity for gas transmission from Karachi to Lahore and in the absence of such a capacity, they are in an uncertain situation.
“The decision of the Supreme Court relating to the North-South Pipeline has major significance as companies setting up new LNG terminals will be encouraged to expedite work in the hope of getting assurance of pipeline capacity,” Zuhair Siddiqui, former managing director of Sui Southern Gas Company told The Express Tribune.
The North-South Pipeline would enhance gas supply to Punjab (which had been facing acute shortages), he said, adding that Sui companies would also fetch more revenue in the form of gas transportation fees.
The ex-MD said the building of pipeline infrastructure would also prove good for the country as it would help enhance the imported gas supply for tackling the energy crisis.
Work on the North-South Pipeline will be a top priority of the government and it has already decided to auction the surplus capacity of existing LNG terminals to private companies. New LNG terminal projects are also in the pipeline.
This will create a significant load on the current gas transmission network, hence, LNG will be transported from the Karachi port to upcountry through the North-South Pipeline.
Universal Gas Distribution Company CEO Ghiyas Abdullah Paracha was of the view that the tariff of North-South Pipeline, being built by government companies, would be lower and the project would be completed in the stipulated time frame.
“The gas price will come down due to enhanced LNG supply; it will give a boost to economic activity,” he added.
Published in The Express Tribune, August 20th, 2020.
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