The government has given discretionary powers to the Ministry of Petroleum and Natural Resources allowing it to earmark liquefied natural gas (LNG) quota for different consumers including power plants.
The permission was granted by the Economic Coordination Committee (ECC) in its meeting held earlier this month. It came following separate decisions taken by the Cabinet Committee on Energy and the ECC for allocating the imported LNG to power producers.
According to officials aware of the development, these decisions to provide LNG for power plants had caused confusion among decision-makers and led to the delay in finalising a gas import deal with Qatar.
Doha has asked Pakistan to arrange a standby letter of credit from power producers before entering into the LNG supply deal.
An ECC member told The Express Tribune that the Ministry of Petroleum and Natural Resources said the Cabinet Committee on Energy had in November last year approved a clean, affordable and reliable energy programme and allocated 725 million cubic feet of LNG per day (mmcfd), which would be supplied when it was available.
Of this volume, Kot Addu Power Company (Kapco) got 140 mmcfd, Nandipur project was allocated 100 mmcfd and Orient, Saif, Halmore and Sapphire plants got 40 mmcfd each.
Later in April this year, the ECC revised the LNG allocation under which 131 mmcfd was earmarked for Kapco, 24 mmcfd for Fauji Kabirwala Power Company and 85 mmcfd for Rousch Power. Afterwards, a summary was sent to the Cabinet Committee on Energy for approval.
The ECC, while reviewing a proposal of the Ministry of Petroleum in June about the allocation of 200 mmcfd of re-gasified LNG to a combined cycle gas turbine power project being set up in Bhikki, near Sheikhupura, decided since re-gasified LNG was an imported commodity, it should be provided to power plants by the importing company itself.
According to officials, the three different decisions caused confusion and sparked questions which forum had the powers to provide the imported LNG to consumers.
On the other hand, the government stopped LNG importer - Pakistan State Oil - and transporting companies - Sui Southern Gas Company and Sui Northern Gas Pipelines - from making allocations. It said the allocation should be done by a ministry or the ECC as was the case of natural gas produced in the country.
This position was also backed by power producers and other consumers, who argued that their lenders were not accepting LNG allocation letters of importing or transporting companies in order to remove bottlenecks.
The Ministry of Petroleum also proposed that it could be allowed to earmark re-gasified LNG based on availability and demand and keeping in view the transportation infrastructure and associated issues.
After deliberations, the ECC gave its support to the proposal and let the ministry decide about LNG quota for the consumers.
Published in The Express Tribune, September 11th, 2015.
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