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ISLAMABAD: The Petroleum Division has admitted that it had faced multiple challenges in spot purchase of LNG, which led them to buy costlier LNG in financial year 2020-21; however, the government is addressing these challenges.

The Senate Standing Committee on Petroleum that met here on Wednesday grilled the Petroleum Division, the Pakistan State Oil (PSO), and the Pakistan LNG Ltd on the spot purchasing of LNG during the month of July, August 2021.

The committee also questioned why RLNG consumers cannot import for their own usage and why government has imported LNG on behalf of the consumers.

Secretary Petroleum Dr Arshad apprised the committee that the loss of gas in last winter was in tune of Rs25 billion. One of the challenges was, the petroleum secretary said, that the PPRA law was not applicable to the oil and gas sector. He said that the Petroleum Division had told the PPRA that its law did not suit LNG. The PPRA had given exemption in the rules. The PPRA has told that there would be no condition of 15 days on-spot purchase till December He stressed that there should be an agreement between the Petroleum Division and the Power Division on take and pay basis. Annual Delivery Plan (ADP), which is finalised every year in September, was changed seven to eight times with a variation in gas demand of up to 30 percent.

He said in forward contract of spot purchase of LNG, traders/supplier demanded extra financial guarantees, which the PSO and the PLL could not provide due to circular debt. “The debt of PSO crossed Rs300 billion and Rs400 billion are receivable of gas companies,” he explained.

The secretary maintained that the government was also facing the challenge of terminal capacity, due to which the government was paying for 1200 mmcfd imported LNG. He said due to some issues both terminals were reluctant to negotiate on additional capacity of 150 mmcfd and 90 mmcfd. He hoped that they would sign agreements with the terminals soon for utilisation of the unutilised capacity.

The official of the PLL claimed that 35 cargoes supplied LNG on spot tenders as an average 12.9 percent of Brent as camper to 13 percent to Brent in long-term agreement with Qatar in 2020-21, 12 LNG cargoes arrived on spot purchase in 2019-20, and 19 cargoes arrived in 2018-19.

Members of the parliamentary panel wanted the government to put names of Hascol Petroleum officials on ECL for an alleged fraud of over Rs66 billion.

Senator Fida Mohammad demanded in a meeting of the Senate Standing Committee on Petroleum to put the names of the persons behind this fraud on the ECL.

Senator Mohsin Aziz said that a company (Hascol) has committed a fraud of more than Rs66 billion.

Chairman Ogra told the committee that the SECP and the State Bank had not contacted them.

The secretary also apprised the committee that the Public Accounts Committee (PAC) had settled all audit objections related to the spot purchase of LNG in its meeting held on Wednesday.

The PAC met under Chairman Rana Tanveer Hussain and examined the Audit Report 2020-21 pertaining to the spot purchase of LNG. The committee was informed that the government had to bear a loss of Rs25 billion for delay in floating tenders for LNG on spot purchase. The committee member expressed concern that subsidised gas to fertiliser sector till 2028 did not have any price impact at grassroots level, as farmers were forced to buy expensive fertiliser from the market.

The committee was informed that Rs200 billion had been allocated for development of 20-day gas storage capacity in Badin, Sindh.

“Non-availability of storage capacity is the main reason that the government could not buy LNG at cheaper rate,” the secretary added. He said they bought 12 cargos each months and one cargo has estimated cost of Rs5 to 7 billion.

Copyright Business Recorder, 2021

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