Power sector may be allowed LNG import

As the country faces electricity outages due to shortage of gas, the government is looking towards the power sector for liquefied natural gas (LNG) import by utilising the idle capacity of LNG terminals.

The government is set to amend the policy that will allocate the unutilised capacity of LNG terminals to power plants for the import of gas for their own use.

So far, Pakistan LNG Limited (PLL) has maintained its monopoly over LNG terminals and the allocation of their unutilised capacity, though it has never been able to utilise the full capacity of these terminals.

For a long time, gas consumers have been paying millions of dollars in capacity charges to LNG terminals but PLL did not allow the private sector to utilise the idle capacity.

Now, the country is facing power outages due to the scarcity of gas following a marked slowdown in LNG supplies through the Strait of Horumuz, a vital shipping lane disrupted by the US-Iran war. PLL has arranged a few spot LNG cargoes at record high prices as Qatar could not ship the contracted consignments.

"Instead of a short-term rolling basis (three months), the relevant state entities (SSGC for the first terminal and PLL for the second terminal) be allowed to auction the operationally possible unutilised capacity for a specified period and quota, to be determined by the concerned regulator, considering the downstream demand and plan for LNG imports," the Petroleum Division said in its proposal submitted to the Economic Coordination Committee (ECC) for approval.

Consumers had been paying over $0.2 million per day in capacity charges to LNG terminals but there were no supplies from the state-owned entities. Since the inception, these terminals have been operating on the model of independent power plants (IPPs), whose capacity was under a contract with the government.

LNG terminals were available but government entities were unable to arrange gas imports. Even before the US-Iran war, Pakistan signed a deal with Qatar for diverting 24 LNG cargoes to other destinations during the ongoing year owing to low gas demand in the country. However, LNG demand emerged after the breakout of US-Iran war but cargo supplies were suspended by Qatar.

At present, Pakistan has two LNG terminals. The government has entered into a contract for the regasification capacity of 630 mmcfd with peak capacity at 690 mmcfd on a reasonable endeavour basis, as and when required, at terminal-2, which has daily delivery capacity of 630 mmcfd.

The unutilised capacity could be offered to private parties as per requirements of Clause 6.2(a) of the LNG Policy 2011. Third Party Access Rights allow all LNG terminals and associated facilities to be operated on a system of regulated third-party access (RTPA) based on published/negotiated tolling tariffs in a competitive environment without discrimination, excluding, however, the tolling tariff for the public sector, which shall require Ogra's approval.

Exceptions from such regulation will be given to those LNG terminals and associated facilities that are developed for their own or dedicated use. Access to such terminals will be based on the negotiated third-party access (NTPA). RTPA and NTPA will