Punjab industries: LNG consumption a distant dream
Price expected to be $13 per mmbtu against local gas tariff of $6.27
Since no tariff for the imported LNG has been announced yet, the industrialists, however, are assuming that the price of LNG-mixed gas will be fixed around $13 per mmbtu including all costs and GIDC. PHOTO: REUTERS
LAHORE:
Once a glimmer of hope for the business community of energy-starved Punjab, liquefied natural gas (LNG) now seems a distant dream.
After the government decided to import LNG to address energy shortages, businessmen in Punjab expected to get some relief. But with a high tariff – the price at which the imported gas will be available – industrialists believe it will not be viable for them and will worsen the situation.
The Ministry of Petroleum and Natural Resources has so far been unable to determine the tariff for LNG imports from Qatar. Apart from this, a bill passed by the National Assembly for the imposition of Gas Infrastructure Development Cess (GIDC) has added to the worries of the business community.
“The industry of Punjab is ready to buy the imported gas, but authorities should reduce the tariff to a level we can afford,” said Shahzad Ali Khan, a Punjab-based industrialist while talking to The Express Tribune.
Currently, the tariff for local gas stands at $4.80 per million British thermal units (mmbtu), which after the imposition of GIDC will rise to $6.27. Similarly, captive power plants are receiving gas at $5.73 per mmbtu, which after GIDC will go up to $7.60.
Since no tariff for the imported LNG has been announced yet, the industrialists, however, are assuming that the price of LNG-mixed gas will be fixed around $13 per mmbtu including all costs and GIDC.
Sindh and Khyber-Pakhtunkhwa industries are not facing any gas cuts under the 18th Constitutional Amendment, so Punjab might be the major buyer of imported gas after the prioritised sectors including the independent power producers, fertiliser plants and compressed natural gas (CNG) stations.
However, the almost double tariff for Punjab’s industries and captive power plants will make it nearly impossible for the industrialists to purchase the gas.
“The expected high tariff for LNG along with GIDC will prove to be the last nail in the coffin of Punjab industrial units as it will further make it difficult for the province to compete with other provinces,” said All Pakistan Textile Mills Association Secretary Anisul Haq while speaking to The Express Tribune.
A weighted average price could be viable for them to consume the imported gas in order to keep their units alive but it will depend on how the price is determined by the authorities.
Some industrialists suggest that anything between $8 and $9 per mmbtu could be borne by Punjab industries at least to meet the orders of European markets and increase Pakistan’s export share in that part of the world.
“Such a price would be acceptable, at least we will be able to operate our units round the clock in order to benefit from the Generalised System of Preferences (GSP) Plus status for which the country has worked really hard,” Khan added.
Published in The Express Tribune, May 21st, 2015.
Once a glimmer of hope for the business community of energy-starved Punjab, liquefied natural gas (LNG) now seems a distant dream.
After the government decided to import LNG to address energy shortages, businessmen in Punjab expected to get some relief. But with a high tariff – the price at which the imported gas will be available – industrialists believe it will not be viable for them and will worsen the situation.
The Ministry of Petroleum and Natural Resources has so far been unable to determine the tariff for LNG imports from Qatar. Apart from this, a bill passed by the National Assembly for the imposition of Gas Infrastructure Development Cess (GIDC) has added to the worries of the business community.
“The industry of Punjab is ready to buy the imported gas, but authorities should reduce the tariff to a level we can afford,” said Shahzad Ali Khan, a Punjab-based industrialist while talking to The Express Tribune.
Currently, the tariff for local gas stands at $4.80 per million British thermal units (mmbtu), which after the imposition of GIDC will rise to $6.27. Similarly, captive power plants are receiving gas at $5.73 per mmbtu, which after GIDC will go up to $7.60.
Since no tariff for the imported LNG has been announced yet, the industrialists, however, are assuming that the price of LNG-mixed gas will be fixed around $13 per mmbtu including all costs and GIDC.
Sindh and Khyber-Pakhtunkhwa industries are not facing any gas cuts under the 18th Constitutional Amendment, so Punjab might be the major buyer of imported gas after the prioritised sectors including the independent power producers, fertiliser plants and compressed natural gas (CNG) stations.
However, the almost double tariff for Punjab’s industries and captive power plants will make it nearly impossible for the industrialists to purchase the gas.
“The expected high tariff for LNG along with GIDC will prove to be the last nail in the coffin of Punjab industrial units as it will further make it difficult for the province to compete with other provinces,” said All Pakistan Textile Mills Association Secretary Anisul Haq while speaking to The Express Tribune.
A weighted average price could be viable for them to consume the imported gas in order to keep their units alive but it will depend on how the price is determined by the authorities.
Some industrialists suggest that anything between $8 and $9 per mmbtu could be borne by Punjab industries at least to meet the orders of European markets and increase Pakistan’s export share in that part of the world.
“Such a price would be acceptable, at least we will be able to operate our units round the clock in order to benefit from the Generalised System of Preferences (GSP) Plus status for which the country has worked really hard,” Khan added.
Published in The Express Tribune, May 21st, 2015.