ECC to decide on resuming LPG plant operations

Secretary says SSGC may provide gas to JJVL plant subject to commercial viability

ISLAMABAD:

The Cabinet Committee on Energy (CCOE) on Thursday referred the matter of resuming operations of Jamshoro Joint Venture Limited’s (JJVL) liquefied petroleum gas (LPG) plant to the Economic Coordination Committee (ECC).

The CCOE met under the chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar.

Energy Minister Hammad Azhar has written a letter to Sui Southern Gas Company (SSGC), asking it to resume gas supply to the JJVL plant, which will boost LPG production and help overcome the current gas crisis.

Prime Minister Imran Khan has also directed the Planning Commission deputy chairman to look into the issue and submit recommendations to the CCOE within two weeks.

Petroleum Division secretary told the CCOE meeting that SSGC was providing gas to various industries and it might also provide gas to the JJVL plant subject to its commercial viability for the public gas utility.

The CCOE emphasised that Pakistan was currently facing acute gas shortages and the resumption of gas supply to the LPG plant should be seen in the backdrop of the overall gas supply in the country.

It was recommended that in the interest of augmenting domestic production of LPG, SSGC should supply 8-10 million cubic feet per day (mmcfd) of natural gas to JJVL for the production of 200 tons of LPG through a commercial agreement.

The resumption of gas supply should, however, be conditional on payment of the undisputed outstanding amount to SSGC, the meeting was told.

It was recommended that the disputed amount, pending decision in court, should be settled expeditiously. Both the parties may apply to the court for an early hearing to resolve the dispute.

The CCOE considered a report on enhancing the domestic LPG production and underscored the need for addressing both short and long-term gas sector issues.

Planning Commission deputy chairman presented recommendations for maximising affordable gas supply to the residential consumers. The committee asked the Petroleum Division to review the recommendations and send a summary to the ECC for decision.

The CCOE had earlier hinted at resuming gas supply to LPG producer JJVL in an effort to mitigate the gas crisis in current winter season. The JJVL plant has been shut for several months, withdrawing 15% of domestic LPG supplies.

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LPG accounts for about 1.5% of the total primary energy supply in the country. In financial year 2020-21, the LPG consumption stood at around 1.79 million tons.

Average per day LPG consumption during the year came in at 4,857 tons, up 23% from around 3,950 tons in FY20.

In FY21, the domestic LPG production catered for around 41% of consumer demand while the rest was imported.

LNG terminals

The CCOE reviewed a report compiled by the Planning Commission deputy chairman on establishing vehicle-based liquefied natural gas (LNG) import terminals.

The committee was told that there was significant investor interest in the sector and port authorities and the Oil and Gas Regulatory Authority (Ogra) would process applications as per the LNG Policy 2011.

The committee underscored the need for activating the task force envisaged in the LNG policy, which would act as a facilitator for the timely completion of terminal projects.

The relevant ministries were asked to review the recommendations and present a concrete way forward.

PM Khan has already given directives to remove hurdles in the way of setting up LNG terminals and a virtual LNG pipeline. He chaired a meeting on the subject on November 15, 2021.

He directed the Ministry of Maritime Affairs and the Ministry of Energy (Petroleum Division) to nominate focal persons for coordinating with investors for the early implementation of projects.

Keeping in view the acute shortage of gas, additional LNG procurement will facilitate industrial, commercial and economic needs of the country. The committee said that competent private parties should be fully facilitated and additional LNG should be available before the winter of 2022.

Based on the deliberations and consultation with stakeholders, the committee recommended using Berth 3 for LNG handling in light of the international practices and safety protocols.

It called for preparing a new policy framework to avoid delay in the assessment of suitable sites by port authorities.

Published in The Express Tribune, December 24^th, 2021.

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