CCOE snubs gas companies

Grills ministry for not implementing cabinet’s decision to award idle capacity

Zafar Bhutta July 09, 2021
Sources said that during the meeting, Umar showed his anger for not implementing the decision of cabinet to allow private sector for LNG import. PHOTO: FILE


The Cabinet Committee on Energy (CCOE) on Thursday snubbed the gas entities for not implementing the decision of the cabinet to award idle capacity of LNG terminal that led to worst power crisis in the wake of dry-docking.

Sources said that during a meeting of the CCOE, Minister for Planning Asad Umar grilled the Petroleum Division for not implementing the cabinet decision one-and-a-half years ago that allowed the power sector to utilise the idle capacity of the second LNG terminal. Officials said that Pakistan LNG Limited (PLL) had no planning of LNG imports during the time of dry-docking when Engro had notified it in March this year.

Officials said that the second LNG terminal had an excess capacity of 150mmcfd. It has total 750mmcfd capacity whereas the government had allocation of 600mmcfd.

However, PLL had not given any schedule to the operator to utilise excess capacity. The capacity of 150mmcfd LNG available at the second LNG terminal could have resolved one-fourth issue of gas supply during dry-docking, sources said, adding that gas utilities were to allocate pipeline capacity but they did not prefer to talk to the private sector.

They further said that PLL did not only allow the private sector to import LNG but it also failed to secure LNG cargoes. Officials said that it had imported one LNG ship at highest rate of $13.4 per mmbtu to meet shortage of gas at the time of dry-docking.

During the last three years, consumers of LNG had paid $99 million capacity charges due to inability of PLL to utilise full capacity of second LNG terminal. Sources said that during the meeting, Umar showed his anger for not implementing the decision of cabinet to allow private sector for LNG import.

Officials said that LNG import by private sector could have helped arrange gas at cheaper rates to meet the requirement of the country.

Sources say that the Petroleum Division informed Umar that there was a delay in implementing a decision of cabinet for utilising idle capacity due to compiling report by Planning Commission deputy chairman in this regard.

However, the Petroleum Division had not submitted this report to the CCOE. In this regard, Umar raised the question of why it had not submitted report to cabinet body on energy so far.

Sources said that CCOE had now directed the Petroleum Division on to submit a report regarding availability and utilisation of idle capacity of terminal and pipeline so far.

The inefficiency of gas utilities was putting additional burden on consumers and the national exchequer as well. Sources said that Energy Minister Hamad Azhar also raised question over the expensive import of LNG. He said that the government was providing LNG to the textile sector at subsidised rates.

During the meeting, he said that the subsidy amount had increased due to expensive import of LNG. Now, the national exchequer would have to bear the cost of delay in awarding idle capacity of LNG terminal and pipeline, officials said.

The CCOE had already approved utilisation of idle capacity of LNG terminal on three-month basis.

PLL had also floated a tender last year in this regard. However, when it floated a tender, Sui Northern Gas Pipelines (SNGPL) had informed the company that its demand of gas had increased. Therefore, gas companied had dropped the plan of the government to award idle capacity of LNG terminal.

At present, PLL has no gas supply agreement with SNGPL. Therefore, these two companies were operating on adhoc basis since 2015.

According to a statement, the Maritime Affairs Division presented the report of the Inter-Ministerial Committee on Establishment of New LNG Terminals. The CCOE was informed that the committee had held extensive consultation and was able to address a large number of issues, which required inter-departmental and inter-ministerial consensus.

The CCOE also received a report of the sub-committee of CCOE on Pipelines Capacity Allocation for New Terminals. The committee was headed by Planning Commission deputy chairman. The committee noted the recommendations and directed the Petroleum Division to submit a formal summary to the CCOE containing the final proposals for approval of the cabinet.

Published in The Express Tribune, July 9th, 2021.

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