Pakistan LNG Limited (PLL), after rejecting bids in the first round, has floated a second tender in a bid to allocate idle capacity of a liquefied natural gas (LNG) terminal to the private sector.
Earlier, PLL had issued a tender, seeking to earmark terminal capacity to the private sector for LNG import.
However, the company management tactfully knocked out the private sector by consuming two contract cargoes in November, which were scheduled for December and January. PLL has contracts with Gunvor and Eni for supply of one LNG cargo each every month.
However, it consumed contract cargoes in those months when LNG prices were low and preferred to import gas through spot contracts at the most expensive rates offered by importers for deliveries in January and February 2021.
Owing to that, the private sector was not able to import a single LNG cargo as bureaucratic hurdles stood in their way, which helped gas companies to maintain their monopoly. Chairman of the Cabinet Committee on Energy has already announced the creation of a competitive gas market through LNG imports by the private sector.
At a recent hearing on applications seeking licences for sale and marketing of LNG, the regulator - Oil and Gas Regulatory Authority (Ogra) - expressed concern over the PLL stance. PLL officials opposed the move, saying state-owned gas companies would lose market, which annoyed the regulator.
However, bureaucratic snags have forced gas consumers to cough up millions of dollars annually in capacity charges to the LNG terminal operator for the idle capacity.
Now, PLL has again invited private sector investors to bid for the unutilised terminal capacity for a short term of six months (February-July 2021).
LNG imports will be equal to the required regasification services for any specific month or for the entire period.
The deadline for submission of offers is January 18, 2021. PLL has offered confirmed idle capacity for three months (February, March and April) whereas the idle capacity for next three months (May, June and July) is provisional when demand for electricity reaches its peak.
An unutilised capacity of 235 million cubic feet per day (mmcfd) is available for February, 136 mmcfd for March and 130 mmcfd for April.
A provisional idle capacity of 50 mmcfd each is available for May and June and 100 mmcfd for July.
PLL utilises its contracted capacity depending on the requirement of gas utilities for the regasified LNG.
In order to ensure optimal utilisation of the terminal, the federal government has authorised PLL to allocate its unutilised capacity to the private sector for the short term, keeping in view the requirement of gas utilities.
The unutilised capacity will be made available to all those interested parties which meet eligibility criteria at charges determined by Ogra for the relevant month. In case the requirement of qualified parties exceeds the available unutilised contracted capacity, the individual capacity allocations will be adjusted proportionately.
The available regasification capacity may vary - both on a daily and monthly average basis - depending on berthing slots and the need of PLL's own customers while considering the finalised schedule for all berthing slots.
Any RLNG not delivered during the said period may be carried forward in accordance with provisions of an agreement. A draft agreement for the allocation of LNG terminal (regasification) services is subject to Ogra's approval.
The regulator has already held public hearings on the applications filed by private sector investors for getting licences for the import and marketing of LNG.
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