SSGC to get steel mill land on lease

Gas utility will acquire land against amount due to be paid by PSM for gas supply

ISLAMABAD:

The board of directors of Sui Southern Gas Company (SSGC) on Saturday approved the acquisition of 11 acres of land on lease from Pakistan Steel Mills (PSM) against its receivables on account of gas supply to the steel unit.

According to sources, the board gave the go-ahead for acquiring the piece of land, which was close to the CTS Bin Qasim, on a lease of 30 years.

The public gas utility will receive the land on lease for a total amount of Rs386 million. It will adjust the payment against the amount due to be paid by PSM for receiving gas supply.

SSGC has planned to utilise the land for establishing infrastructure for the handling and supply of liquefied natural gas (LNG).

At present, two companies - Energas and Tabeer Energy - are developing two new LNG terminals in Pakistan. These are in addition to the two LNG terminals already working in the country.

SSGC will establish a tie-in point of gas pipeline for the new LNG terminals. According to sources, the gas utility will recover the actual cost from the new LNG terminal operators.

The Ministry of Maritime Affairs, which is dealing with the new terminal operators, has been pushing SSGC to acquire a piece of land from the steel mill to clear the way for establishing a tie-in point by the terminal operators.

Earlier, SSGC was resisting the pressure but later it agreed to acquire the PSM land.

The government is facilitating the LNG terminal operators in developing infrastructure in a bid to overcome gas crisis in the country.

The two existing LNG terminals, owned by Engro and Pakistan GasPort, have a cumulative handling capacity of 1,300 million cubic feet per day (mmcfd).

However, the second terminal owned by Pakistan GasPort has not been fully utilised by LNG importer Pakistan LNG Limited (PLL). Consumers have paid around $99 million in capacity charges for not utilising the entire handling capacity of the terminal.

There are hurdles in the way of allocating the additional capacity of the Pakistan GasPort terminal to the private sector for LNG imports.

The cabinet, in its meeting held on August 27, 2020, had decided to bridge the gas shortfall by making arrangements for additional LNG imports.

It also allowed the setting up of new LNG terminals. It directed gas utilities - Sui Northern Gas Pipelines Limited (SNGPL) and SSGC - on October 19, 2020 to facilitate the new LNG terminal developers.

An inter-ministerial meeting, held on April 8, 2021 and co-chaired by the minister of maritime affairs and special assistant to the prime minister on petroleum, decided that SSGC should hand over required land to the new terminal developers.

PSM also revealed that its board of directors had approved the lease of an additional 11 acres of land to SSGC for 30 years.

Consequently, the SSGC management recommended its board of directors in a meeting held on Saturday to acquire 11 acres of land, adjacent to the CTS Bin Qasim, on 30-year lease.

“Until this matter is sorted out by the Law Division and the Ministry of Energy, SSGC’s board of directors cannot take up the matter,” said SSGC when approached for its comment on the lease of PSM land.

The company was referring to a meeting scheduled to be held on February 8 between the assistant consultant of Law and Justice Division and the Petroleum Division, SSGC and PSM to deliberate on issues pertaining to steel mill’s liabilities against gas supply by SSGC.

Published in The Express Tribune, January 30^th, 2022.

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