Under new LPG policy, the Oil and Gas Regulatory Authority (Ogra) has been empowered to revoke licences of those who would fail to demonstrate firm supply commitment of minimum 5 tons per day for a period of 3 consecutive years.
According to new LPG policy 2011, approved by the Economic Co-ordination Committee (ECC) of the Cabinet recently, the Ogra would issue provisional licences for an initial period of one year to technically and financially sound applicants/parties for construction of works commensurate with their work program subject to providing commitment of LPG supplies from local or international source. The Ogra will revoke licences of the licence holders, including existing licence holders, who fail to demonstrate firm supply commitment of minimum 5 tons per day for a period of 3 consecutive years.
The policy envisages the work program will ensure that adequate storage, cylinders and logistics infrastructure are constructed within this timeframe in line with the marketing plan of the company. On completion of works, to the satisfaction of the Ogra, the 'provisional licence' will be converted into 'marketing licence' for a period of fifteen years, subject to its availability of LPG supply.
The Ogra will also issue licences for production/extraction/LPG air mix plants, LPG storage and filling plants, LPG refuelling stations and bowzers for transportation of LPG. However, permission from department of explosives will also be required, wherever applicable under Mineral and Industrial Gases Safety Rules, 2010.
The regulator, Ogra, will induct additional reputable third-party inspectors to check/monitor compliance with the terms and conditions of licences. The Hydrocarbon Development Institute of Pakistan (HDIP) would be given preference, subject to its capacity/technical competence. The licences shall be cancelled in case of non-compliance with licensing terms and conditions.
The exploration and production (E&P) companies shall, directly or through Sui companies, exercise their right to set up LPG extraction facilities at gas fields where LPG can be commercially extracted in accordance with the development plan approved by the government. In case the E&P company does not set up LPG extraction plant in accordance with timelines, then SNGPL and SSGC will set up their plants, and the E&P companies will forego their right. Public sector Sui companies will have first preference over the LPG extracted by public sector E&P companies.
This policy aims at increasing LPG supplies, through indigenously produced and imported product, streamlining its distribution at competitive prices, especially to LPG-starved areas of the country, and promoting healthy competition for growth of LPG market while ensuring minimum safety standards across the LPG supply chain. To achieve this goal, issues regarding LPG production, LPG licensing, safety standards, pricing, distribution in under-developed areas and import of LPG have been addressed in this document.