LNG procurement plan for FY2022-23 finalised

ISLAMABAD: The Ministry of Energy (Petroleum Division) has finalised its LNG procurement plan for FY 2022-23 according to which it intends to procure 37 spot cargoes sans PPRA rules in the national interest and for larger public good, sources close to Secretary Petroleum told Business Recorder.

Petroleum Division which has failed to timely procure LNG spot cargoes apparently due to higher prices in the international market was under severe criticism at all forums for its incompetence in dealing with the issue.

National Electric Power Regulatory Authority (NEPRA) time and again criticized the concerned authorities for not procuring required quantity of LNG for the power sector on time, due to which NPCC operated furnace oil-fired expensive plants, cost of which was recovered from the consumers.

Prime Minister Shehbaz Saharif took serious view of Petroleum Division’s incompetence in procurement of fuel for the power sector.

PPRA rules: LNG cargoes given 6-month exemption

PPL intends to procure spot cargoes in the following order: (i) two cargoes in July 2022; (ii) five cargoes in August 2022; (iii) three cargoes in September 2022; (iv) four cargoes in October 2022;(v) three cargoes in November 2022; (vi) three cargoes in December 2002; (vii) three cargoes in January 2023; (viii) three cargoes in February 2023; (ix) three cargoes in March 2023; (x) three cargoes in April 2023; (xi) three cargoes in May 2023; and (xii) three cargoes in June 2023.

According to Petroleum Division, Pakistan LNG Limited (PLL) is engaged in procurement cycle for spot cargoes in July 2022 and onwards and spot tenders are required to be conducted immediately, while exemption from PPRA Rules is till June 2022.

“Due to extreme volatility in spot LNG market, PLL is facing challenges to procure LNG from the spot market given applicability of PPRA rules especially rules 13(1) and 35 of PPRA rules. PPL has requested PPRA to grant exemption to it from rules 13(1) and 35 of PPRA rules for procurement of spot cargoes from July 2022 to June 2023 for approximately 37 sport cargoes,” the sources added.

Petroleum Division, in its letter of April 12, 2022 requested Managing Director PPRA to allow exemption to Pakistan LNG for minimum time period required under PPRA Rules 13(1) and 35 for procurement of approximately 37 spot cargoes from July, 2022 to June, 2023.

PPRA through letter of March 18, 2022 granted approval from applicability of the Rules 13 & 35 of the Public Procurement Rules, 2004 to PLL for procurement of LNG through spot procurement of 27 cargoes of LNG till June 30, 2022.

PLL maintains that it understands that PPRA is in the process of notifying amendments in PPRA Rules to cater for procurement of LNG from spot market in line with the international industry norms.

“Considering the unprecedented global energy dynamics, spot LNG market is likely to remain volatile in the next 1-2 years as reported by reputable market intelligence firms; PPRA has been requested to grant exemptions to PLL from rules 13(1) and 35 of PPRA rules for procurement of spot cargoes from July 2022 to at least June 2023,” the sources continued.

Copyright Business Recorder, 2022