MUSHTAQ GHUMMAN

ISLAMABAD: Ministry of Planning, Development and Reforms has reportedly opposed provision of RLNG to “inefficient” captive power plants, well informed sources told Business Recorder.

The comments of Planning Ministry headed by Ahsan Iqbal are part of the summary to be prepared by the Ministry of Petroleum and Natural Resources on relaxation of moratorium on new gas connections.

Ministry of Planning and Development argues that the Petroleum Ministry’s proposal regarding relaxation of moratorium to allocate imported RLNG on “as and when available basis” to industrial/ commercial consumers except captive power plants being inefficient mode of power generation, is supported. The moratorium for new supply to captive consumers may continue.

It further stated that OGRA being a regulator determines a number of gas connections per year for both SNGPL and SSGCL on the basis of gas supply availability/ supply, infrastructure requirements and financial position of the Sui companies.

Ministry of Finance, sources said, maintains that the moratorium on new gas connections was up to 2021 and thereafter as a principle the original policy became enforceable; in case this is not done then Petroleum Ministry is required to apprise as to whether relaxation has been provided since then.

It also said that the first RLNG terminal supplies are dedicated to three RLNG-fired power plants (Haveli Bahadar Shah, Balloki and Bikhi), therefore Petroleum Ministry may indicate the surplus volume available for other sectors.

Finance Ministry further argued that in view of the continuous upward trend in crude prices, how will it be possible for Petroleum Ministry to rationalize the RLNG prices with the indigenous gas prices.

Ministry of Industries and Production has supported the proposal subject to availability of required volume of gas.

Due to increasing gas shortfall Prime Minister approved a ban on new commercial/industrial connections on April 18, 2011 for period of six months. Subsequently, the moratorium was further extended for a period of one year, i.e., up to October 18, 2012.

Under the said moratorium following was approved: (i) no new applications for the industrial/commercial will be entertained except Roti Tandoor (stand alone); and (ii) natural gas through the Sui transmission system will not be provided to high rise buildings and new housing schemes. These will be encouraged to energize their customers through Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG) and Alternate Energy sources.

Upon expiry of one year extension, another summary of November 12, 2012 was submitted to the Prime Minister proposing to extend the moratorium for further one year. However, the said summary was returned on May 20, 2013 terming the proposal as redundant. Subsequently, two summaries of October 22, 2013 and July 02, 2014 on the subject seeking further orders of the Prime Minister regarding extension of moratorium were submitted to the Prime Minister’s Office respectively, however, the decision on the same is awaited.

The first LNG terminal is fully operative since March 2015 and Re-gasified Liquefied Natural Gas (RLNG) supplies to the tune of 400 Million Cubic Feet per Day (MMCFD) have since commenced. The said RLNG supplies are currently being provided to power, fertilizer, CNG and textile sector consumers. Pursuant to decision of Economic Coordination Committee (ECC) of the Cabinet of September 3, 2015, the Ministry of Petroleum and Natural Resources has been authorized to allocate RLNG volumes based on availability of RLNG and keeping in consideration the transportation, infrastructure and allied matters. In addition, the government is also establishing second LNG terminal with 600 MMCFD capacity which will have its first gas flow in July, 2017 as per the LNG (Operations and Service) Agreement.

According to sources, to cater for the transport of imported LNG, a dedicated line with 1.2 Billion Cubic Feet per Day (BCFD) capacity was scheduled for expected completion by Q1-2017 thereafter, 1.2 BCFD RLNG can be transported from South to North. Pursuant to ECC decision Petroleum Ministry has allocated RLNG volumes to various existing consumers of power, fertilizer, CNG and textile sector to whom RLNG is being supplied at notified price.

Meanwhile, various applications have been received in respect of provision of new gas connection to various industrial, commercial, captive consumers along with new housing societies/colonies; however, owing to subject moratorium none is being entertained.

After explaining the background Petroleum Ministry has proposed that moratorium on new gas connections for industrial, commercial, captive consumers, the load enhancement of existing such consumers and new housing societies/colonies may be relaxed enabling the Ministry to allocate RLNG volumes to these prospective consumers on “as and when available basis” located on transmission and distribution network of M/s Sui Southern Gas Company Limited (SSGCL) and M/s Sui Northern Gas Pipelines Limited (SNGPL) respectively. The cost of laying of dedicated line for supply of RLNG from nearest network pipeline will be borne by the RLNG consumer.