ECC poised to decide on JJVL LPG production
PHOTO: FILE
The Economic Coordination Committee (ECC) is set to decide whether Jamshoro Joint Venture Limited (JJVL) should resume production of liquefied petroleum gas (LPG) to increase domestic supply and reduce reliance on imports.
LPG imports have increased following discontinuation of an LPG agreement between JJVL and Sui Southern Gas Company (SSGC). The public gas utility has floated a tender for the import of 2,500 tons of LPG in one month compared to the earlier practice of importing around 1,500 tons in a month.
JJVL was producing 300 to 500 tons of LPG per day. LPG accounts for about 1.2% of primary energy supply in the country. The low share is due to supply constraints.
Only 24% consumers are provided with natural gas and the remaining 76% rely on LPG, kerosene oil, wood and other fuels. Annual LPG consumption is estimated at 1.06 million tons.
The Petroleum Division, in a summary sent to the ECC, has proposed that SSGC may consider resuming natural gas supply to JJVL for the production of LPG/natural gas liquids (NGL) on a day-to-day basis, with a clear understanding that it may be stopped anytime, preferably until the final Supreme Court order.
Affco has been appointed by the court to keep a reasonable proportion of revenues from the JJVL’s share in an Escrow account after regular payments to SSGC in order to protect the interest of gas utility and make adjustments in case of non-payment of petroleum levy by JJVL, the Petroleum Division said.
While other suppliers are paying the petroleum levy, JJVL owes Rs94 million in principal amount plus late payment surcharge for the period November 2017 to June 2018 and around Rs300 million in principal amount plus late payment surcharge for the period January 2019 to June 2020.
The Petroleum Division proposed that JJVL should pay the petroleum levy and withdraw cases from court. Alternatively and to safeguard their legal rights, they could submit the outstanding amount in court, in such a way that the funds were secured, if the court gave ruling in favour of the government.
The Auditor General Office should be directed to request the court for early disposal of the case, it said.
The pending freight matter for the period 2005-2013 would be decided by the Supreme Court, the Petroleum Division added.
It emphasised that it was important to highlight that the domestic LPG production met around 65% of annual demand while the rest was met through imports.
Since the shutdown of JJVL, it said, no shortage had occurred because the gap had been filled through more imports. After a few days of volatility, LPG prices had also stabilised, it added.
A committee constituted by the Cabinet Committee on Energy is preparing recommendations in consultation with the stakeholders.
The Petroleum Division was of the view that SSGC ought to consider restarting production at JJVL at terms that were not detrimental to its interests until the final decision of Supreme Court.
Published in The Express Tribune, August 20th, 2020.
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