ISLAMABAD: A special purpose company, Universal Gas Distribution Company (Pvt) Limited (UGDC) has proposed the government for a long-term allocation of LNG and pipeline capacity to attract viable suppliers to import LNG at competitive rates.
The UGDC is a special purpose company that was set up in 2016 following the approval of the Economic Coordination Committee (ECC) to import LNG for CNG sector with financial risk.
Subsequently, third party access rules (TPA) was already been framed to enabling private sector to import and market the imported fuel.
Recently, state-owned company Pakistan LNG Limited (PLL) had to face criticism for importing LNG on spot basis that was expensive and the private sector was forced to consume it.
The government is also taking financial risk of LNG imports.
When private sector imports LNG, it will also take its financial risk, UGDC CEO / director Ghayas Paracha told a group of media persons.
He maintained that the CNG sector in Punjab and Sindh is already receiving 150MMcfd of RLNG via existing terminals and pipeline capacities. No additional capacities are required.
Only two to three percent new CNG stations may add on if the government allows importing LNG by the company, he said.
The government is subsidizing imported gas for the textile sector. It was only the CNG sector that was paying full tax to the government and the cost of imported gas.
It had been struggling for the last five years to import LNG, he said. The CNG sector must achieve a petrol-CNG parity of at least 30 percent for sustenance through its own import and passing on the benefit of cheaper gas to the people.
The UGDC opined that it is not a new customer as it was already consuming 150MMcfd gas and, therefore, wanted to import LNG on its own at cheaper rates.
Under a plan, the UGDC is to maintain a price difference of 30 percent compared to petrol price.
However, the CNG industry is forced now to consume that gas which the PLL is importing on spot basis.
Therefore, the UGDC wants to import LNG at competitive rates to maintain price difference between gas and petrol.
In letter to the government, the UGDC says that grant of regasification services by the PLL/SSGC to the UGDC to service CNG sector on private gas in terminal 2/terminal-1 on a long-term basis (till commissioning of both private terminals or at least three years) so that the UGDC is able to take on the challenge of importing LNG initially, the UGDC CEO said.
Under its short-term (spot) supply and later engage in long-term contracts with the LNG producers/suppliers, this will not be possible with capacity holding of merely three months.
Adhoc offerings will not enable private sector to contribute to the LNG supply chain till the both LNG terminals are not allowed.
However, state-owned gas companies have been maintaining the monopoly to deprive the private sector from importing LNG.
Now, the PLL had floated a tender to utilise the idle capacity of the LNG terminal for three months.
The CNG sector operates 365 days of the year and its demand is consistent throughout the year with minor variations around national holidays when travelling is extensive.
The government had placed the CNG sector last on the government-owned gas supply priority and had suggested that the CNG sector may arrange LNG on its own, so that the government is no more responsible to supply gas to the CNG sector.
Copyright Business Recorder, 2021
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