CNG industry ready to open LCs for LNG import

Industry representatives visited Qatar to see LNG infrastructure.

ISLAMABAD: After aggressively promoting liquefied natural gas (LNG) for the ailing energy sector, the government has hit a barricade as it is facing difficulty in finding LNG consumers.

However, the compressed natural gas (CNG) industry has stepped in and told the government that it is ready to open letters of credit (LCs) for LNG import to revive the CNG industry in Punjab, which has been shut for several months.

At present, the CNG industry and Sui Northern Gas Pipelines Limited (SNGPL) are to settle the issue of distribution charges in line with the decision of the Economic Coordination Committee (ECC) taken in September last year.

CNG industry representatives had recently visited Qatar to observe the LNG infrastructure.

“Government should help settle the issue of distribution charges with SNGPL to clear the way for LNG import in line with the set timeline,” a top official of the CNG industry, Ghayas Paracha, said.

He said that SNGPL would work as a transporter of imported LNG. “We are ready to bear unaccounted-for-gas (UFG) loss of over 4.5%,” Paracha said, adding that this issue should be resolved immediately to meet the timeline for LNG import.

In a letter written to Petroleum Minister Shahid Khaqan Abbasi on Monday, the CNG industry appreciated the efforts of the government for initiating the import of LNG to service various industries including the gas sector.

They said that it would revive the waning CNG industry worth Rs450 billion, which would, in turn, stabilise the economy.

“While the moves to rejuvenate the CNG industry were in progress, we have worked to complete various tasks on our part, while requests for various administrative approvals have been submitted to the officials concerned,” the letter adds.

It added that the CNG sector was now at the stage of opening LCs through its own resources, having gained the required financial strength and can well be in a position to receive LNG in March, the target date set by the government.

“We, therefore, request you to direct the concerned government departments and agencies to complete the pending work including regulatory approvals, so that we can proceed with the LCs in a week or 10 days’ time,” it says.

The other issue facing the CNG industry is the allocation of capacity to transport the imported LNG. In a letter sent to the Oil and Gas Regulatory Authority (Ogra), the industry said that it was an existing consumer, utilising pipeline capacities including transmission and distribution networks of both the integrated companies. The CNG consumers who are tapped from the systems have contracts of supply of gas with the existing companies.

“Now, with the import of LNG, only the source of supply and ownership of gas is being changed and practically no change is being brought about in the physical gas supply and distribution networks, hence, not affecting any new major investment on the part of any party.

“We are endeavouring to ensure continuity of utilising the existing capacity in the distribution and transmission networks of both Sui companies,” the CNG industry said, adding that as decided by the government, the model for import and utilisation of LNG by the CNG sector has already been approved (200 mmcfd).

“We have to abide by the timelines set out in this regard on or before March 15, 2015.”

“Ogra is requested to kindly approve utilisation of the transmission and distribution capacity (200 mmcfd) by Universal Gas Distribution Company (Pvt) Limited (UGDC) on existing transmission and distribution networks of Sui companies in accordance with Rule 11 of OGRA Natural Gas (Third Party Access) Rules, 2012,” CNG industry added.

Published in The Express Tribune, February 24^th, 2015.

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