Global Energy Holdings (GEH) is reportedly seeking a special status to obtain the priority right of liquefied natural gas (LNG) supply to Pakistan in an apparent bid to establish its monopoly on imports by blocking the entry of other LNG importers.
Documents presented in a public hearing conducted by Oil and Gas Regulatory Authority (Ogra) on September 12 reveal that GEH has requested Ogra to grant it priority entry into the grid and stop the entry of other producers if needed.
Ogra held the public hearing to grant GEH the construction licence for the LNG import project. Sources told The Express Tribune that Ogra reserved the decision after the September 12 public hearing.
Pakistan Professionals Institute (PPI), which is an advocacy group to safeguard the rights of the public, participated in the public hearing as an intervener. It demanded that Ogra should revoke the conditional construction licence issued to GEH with immediate effect.
It said that GEH had not carried out initial studies to qualify for the licence. It also asked the Competition Commission of Pakistan (CCP) to take action against what it called an attempt to establish monopoly on LNG supply to Pakistan.
PPI alleged that GEH had not come clean in its project model and application for the construction license to Ogra. It alleged that the company intended to launch the LNG import project without adhering to the essential legal requirements of Port Qasim Authority (PQA), Sindh Environmental Protection Agency (Sepa) and Ogra.
“The review of the licence application by GEH has revealed a matter of extreme concern which, we believe, violates the laws of the CCP and is intended to intentionally curb any entry of any other competitor for LNG import,” it said. PPI said that it was unacceptable in the larger public interest.
PPI further stated that GEH, in violation of the government’s LNG policy, wanted to obtain a “bonded warehouse status” with the project being outside the customs area and not subject to Ogra regulations.
GEH in its presentation said that it was ready to take all market operations-related risks. “Our natural gas sales tour customers will be realised outside customs area of Pakistan as per international trading practices,” it said.
GEH is seeking exemption from the Ogra regulatory process for the sale of LNG and also wants a special tax status. However, neither the LNG policy nor Ogra rules provide for any such exemption.
“LNG Policy, 2006, Section 7.1 (a) already provides for zero customs duties on imported LNG. It is not understood why the applicant seeks unilateral exemption from the tax laws of the country,” PPI said, adding that the GEH project model sought total monopoly on the LNG supply to Pakistan, which was contrary to LNG Policy, 2006.
An official of GEH told The Express Tribune on condition of anonymity that the company had not sought exclusive rights of LNG supply to Pakistan.
“We have just asked Sui Southern Gas Company Limited (SSGCL) to grant us priority entry, as we want to bring LNG to Pakistan on a priority basis next year,” the source said. It said that other parities, such as Engro and Pakistan Gas Port, were also trying to bring LNG to Pakistan.
“We do not want to stop the entry of any party, as the Pakistani market is open to all LNG importers,” it said.
The source also said that Sepa had conducted a public hearing on the environmental impact and its technical committee had also evaluated the report. “Ogra would never issue the licence unless we provided complete studies,” it said. It added that the country was facing a shortfall of two to 2.5 billion cubic feet gas per day (bcfd).
Published in The Express Tribune, September 17th, 2011.
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