A parliamentary panel on Thursday expressed concern over the lethargic attitude of government departments that created bottlenecks in the way of liquefied natural gas (LNG) import by the private sector to maintain their monopoly over the gas network.
This led to the gas crisis in winter, which resulted in suspension of gas supply to the captive power plants of industries and compressed natural gas (CNG) stations in Sindh and Balochistan.
The government approved a policy in July 2020 which allowed the power sector to import LNG. However, the private sector faced hurdles as Pakistan LNG Limited (PLL) failed to allocate idle capacity of an LNG terminal.
Consumers have paid around $99 million in three years on account of capacity charges for not utilising idle capacity of the LNG terminal.
The Senate Standing Committee on Petroleum discussed the delay in LNG import by the private sector. The committee was briefed by officials of various government entities including Sui Northern Gas Pipelines Limited (SNGPL) and Petroleum Secretary Ali Raza Bhutta.
Committee Chairman Senator Abdul Qadir asked about the reasons for delay in LNG import in winter months while committee members inquired about the sale and supply agreement between PLL and gas utilities.
“Despite so many years of LNG import, there is no agreement between the state-owned entities and this is the reason why LNG import is unstructured,” said Qadir.
He noted that due to the lack of any sale and purchase agreement, the gas companies had failed to draw up the annual import plan.
Read Gas shortage ‘not linked with LNG import’
“This is the reason why the private sector is not given an opportunity to import LNG, despite the fact that this move will not only save government money but will also push competition among LNG buyers.”
Discussing the contract between PLL and SNGPL for LNG supply, the officials apprised the committee that 90% of the agreement had been finalised and it would be concluded in one month.
Committee members were informed that SNGPL had to give around Rs212 billion to PLL for LNG purchase.
The parliamentary panel also discussed the establishment of two more terminals in Gwadar for LNG import and its supply to the rest of the country through bowsers.
Petroleum secretary informed the committee that the matter had been delayed because NOC had not yet been granted by the Ministry of Maritime Affairs and the local deputy commissioner.
Committee members criticised the lack of coordination among different government departments. They demanded that Chairman Senator Abdul Qadir give a ruling against the delay in making the LNG terminals operational in Gwadar.
“This is nothing short of inefficiency as government departments have not been able to resolve the matter,” Qadir said, adding that the petroleum ministry should deal with the Gwadar terminals issue on a fast track.
He directed the petroleum ministry to devise a mechanism for gas supply at lower rates to the areas enduring severe cold during winter.
The committee noted that cheap gas supply to the fertiliser sector was not getting the desired results, therefore, it should be stopped.
Senator Afnanullah Khan was of the view that Pakistan’s exports would decline due to non-availability of gas for the industrial sector.
Read more LNG terminal operator eager to expand capacity
Responding to that, the petroleum secretary said that because of decrease in domestic production and increase in demand, the government had to suspend supplies.
It was government’s policy to stop gas supply to the captive power plants due to the circular debt of over Rs2 trillion. However, the ministry has given directives that every textile mill can get gas supply after an efficiency audit.
Committee chairman asked Energy Minister Hammad Azhar whether the industries could import LNG on their own.
Published in The Express Tribune, January 7th, 2022.
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