Injecting LPG air mix in gas supply system

The government is planning to inject liquefied petroleum gas (LPG) air mix in the system which is expected to increase the prices by up to 30 percent, according to official documents available with Business Recorder.
The Economic Co-ordination Committee (ECC) of the Cabinet in its decision on a summary of Petroleum Ministry of December 26, 2007 on policy guidelines on LPG air mix, CNG or LNG based pipeline distribution projects undertaken by Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC) approved policy guidelines which were issued by Ogra.
These guidelines are applicable to 'stand alone' distribution projects for supply or piped LPG air mix LNG or CNG to retail consumers on specific directives of the President, Prime Minister, Cabinet or the ECC.
Retails tariff applicable in case of these projects will be the same as that of natural gas being supplied to different categories of consumers through existing transmission and distribution network. All expenditures on installing, maintaining and operating these projects including cost of gas will be included as permissible expenditure to the revenue requirements of the respective gas companies.
The gas utility will ensure prudence in all such expenditure to the satisfaction of the regulatory authority and also ensure ring fencing of all capital and revenue expenditures, including all cost allocations in respect of each such project.
SNGPL and SSGC will be entitled to a rate of return equal to the rate of return applicable for gas operations. Currently, SSGC is supplying LPG air mix to Gwadar (Balochistan), Noshiki (Balochistan) and Kot Ghulam Muhammad (Sindh). LPG air mix plant has also been installed at Sorab (Balochistan) which is yet to be commissioned.
According to the documents, in view of the gas shortages resulting in supply curtailments to various sectors, the gas companies are contemplating to extend the supply of LPG air mix to new areas as well as existing consumers as a peak saving strategy. However, the approved policy guidelines do not provide flexibility to the Sui companies to initiate such project without specific directives of the President, Prime Minister, Cabinet or ECC of the Cabinet.
With a view to providing facility to the gas companies for initiating such projects it was proposed that these guidelines should be applicable to the 'stand alone' distribution for supply of piped LPG air mix, LNG or CNG by the gas companies (SNGPL and SSGC) to the retail consumers subject to approval of Board of Directors, keeping in view the technical and financial feasibility of the project.
The following guidelines will be issued: "Ogra will include the cost of LPG air mix in uniform cost of gas formula in order to compute the Weighted Average Cost (WACC). Injection of LPG air mix into the system is expected to increase the weighted average cost of the gas from Rs 308.93 per mmbtu to the following level depending upon the volumes injected.
LPG air mix volume-10 MMCFD-WACCG Rs 313.79 -increase Rs 4.84-1.57 percent. 50 MMCFD- WACCG Rs 332.66 -increase Rs 23.87-7.73 percent. 100MMCFD- WACCG Rs 356.94 -increase Rs 46.99-15.21 percent and 200 MMCFD- WACCG Rs 400.05 -increase Rs 91.10-29.49 percent. Sources said that a summary is being submitted to the ECC of the Cabinet to get approval, as the Minister for Petroleum has already given go ahead signal.