ISLAMABAD: The Economic Coordination Committee (ECC), scheduled to meet on Wednesday (Oct 7), will consider a proposal to allow issuance of new CNG licenses amid depleting indigenous gas.
Sources said that the Finance Ministry, the Planning and Industries Ministry, were backing a proposal of issuance of new CNG stations’ licenses based on the RLNG.
The government already announced its full support to the private sector to import LNG. Following this proposal, the Petroleum Division proposed to allow issuance of new CNG licenses based in the RLNG. Last week, Special Assistant to the Prime Minister (SAPM) on Petroleum Nadeem Babar had stated in a conference organised by the Universal Gas Distribution Company (UGDC), a body of CNG industry, that import bill would be reduced by Rs600 billion while importing LNG by the private sector.
The government had allowed private sector to import LNG to utilise full capacity of second LNG terminal whose capacity had remained idle during the last couple of years due to reluctance of the power sector to uplift gas.
Now, the full capacity of the terminal will be used resulting in lowering tolling fee for the customers.
Sources said that the Petroleum Division had moved a summary to the cabinet seeking permission to grant new CNG licenses on the RLNG as the private sector had been allowed to import the LNG.
In a statement, the UGDC Chief Executive Officer (CEO), Ghayas Paracha, said that the government could save Rs97 billion during the next 12 years by handling 150 mmcfd additional LNG through second LNG terminal.
He appreciated the government for facilitating the private sector to import LNG, and said that that duration of loadshedding in winter season would be reduced, if the private sector was able to import LNG.
He said that the CNG sector would not only be boosted economically but gas companies would be able to minimise gas load in the winter season.
The Petroleum Division said that the federal cabinet in its meeting held on April 12, 2017, while considering a summary submitted by this ministry (Petroleum Division), had relaxed the moratorium on new gas connection based on RLNG.
Therefore, the gas utility companies are now in a position to provide new gas connections, inter alia, to the CNG sector applicants, based on supply of the RLNG.
Further, the private sector is now taking up the import of the LNG to service the CNG sector, and the burden on the government to ensure gas supply to this sector is also shifting.
In addition, it is stated that the CNG pricing was deregulated in 2016 by the government, and now it relies on market forces.
However, the CNG price is still cheaper than the price of petrol in terms of mmbtus.
Keeping in view the facts stated the Petroleum Division proposes that permission to grant new CNG licenses or RLNG may be accorded.
The Ogra will incorporate in terms and conditions of the RLNG-based CNG licences that the license is only for the RLNG-based CNG, and the licensee cannot claim for its conversion to indigenous gas.
Pursuant to the Oil and Gas Regulatory Authority (OGRA) Ordinance, 2002, and the provisions of CNG (Production and Marketing) Rules, 1992, issuance of a CNG license to any prospective investor/applicant falls under the exclusive domain of the Ogra.
The then caretaker prime minister, while receiving a presentation on review of power and gas situation inter-alia directed on January 6, 2008 that new CNG licenses in the pipeline to be held-up, the CNG connections should not be given except to those who have already imported CNG machines".
Later on April 18, 2011, the then prime minister imposed a moratorium on provision of new industrial and commercial gas connections across the country with immediate effect for a period of six months.
Before the expiry of the said moratorium, the then prime minister on September 30, 2011 while considering a summary submitted by the Ministry of Petroleum and Natural Resources (now Petroleum Division, Ministry of Energy) approved certain proposals with respect to the CNG sector, which were conveyed to the Ogra on October 4, 2011, for taking further necessary action and consequently the Ogra issued marketing licenses to the prospective applicants.
Copyright Business Recorder, 2020
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