SNGPL rejects company’s request for LNG distribution

Says Universal Gas Distribution Co has not got licence from OGRA.

LAHORE: Sui Northern Gas Pipelines Limited (SNGPL) has turned down Universal Gas Distribution Company’s (UGDC) request for inking an agreement and allowing the latter to market and distribute liquefied natural gas (LNG) to compressed natural gas (CNG) stations without a licence from the Oil and Gas Regulatory Authority (Ogra).

UGDC Chief Executive Officer Ghiyas Paracha said the company had received advance payments from 800 CNG stations for the supply of LNG in order to make the stations operational again.

SNGPL, in a letter on May 11, argued that Ogra had not yet granted licence to UGDC for the sale of gas under Rule 4 of the Natural Gas Licensing Rules 2002, which requires the regulator to hold a public hearing in which all stakeholders including SNGPL should participate. In the hearing, the authority can make a decision with respect to the law.

SNGPL said UGDC, therefore, could not enter into any third-party arrangements for LNG supply with Pakistan State Oil (PSO), nor could it hold the title of LNG, since it would be against Ogra’s statute.

It maintained that the only viable option left was to transfer the title of LNG to SNGPL, which would then deliver it to the CNG sector at the price notified by Ogra.

According to SNGPL, UGDC’s proposal of supplying LNG to its nominated CNG stations was not considered viable by its board of directors since it would result in two different prices of CNG in Punjab while following two entirely different curtailment schedules, which was not practical.

The board rejected the issuance of a no-objection certificate for the grant of 20-year licence for the sale of gas to UGDC in its 443th meeting, the gas utility said.

In a letter to the minister for petroleum and natural resources in March 2014, Paracha, as the Supreme Council Chairman of the All Pakistan CNG Association, said they had planned to import LNG with their own resources and through foreign suppliers under the LNG Policy 2011 in order to distribute it to CNG stations.

Talking to The Express Tribune, Paracha said there was no need for an Ogra licence for marketing and distributing the imported LNG to CNG stations, therefore, the objection raised by SNGPL was just to keep its control over this business.

Published in The Express Tribune, May 14^th,  2015.

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