Federal Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi has said that Pakistani and Iranian delegates will hold talks over the construction of Iran Pakistan (IP) gas pipeline within the next few days. Addressing a press conference here on Monday, Abbasi said the government has allowed Compressed Natural gas (CNG) stations to start importing Liquefied Natural Gas (LNG) for meeting the demand of CNG sector.
He said this decision will enable CNG stations to keep operating throughout the year (at present, CNG stations are operating two days a week in Punjab and four days a week in Sindh). The minister said the decision will not only protect jobs of some 0.7 million people associated with CNG industry, but in future will create an estimated one million job opportunities.
The minister said in the first phase, all Pakistan CNG Association intends to start import of 200 Million Cubic Feet per Day (MMCFD) of LNG which finally will soar to 500 MMCFD. Answering a question, he said that during the current month high level Pakistani and Iranian delegations will meet to finalise the financial issues of the gas pipeline, adding that Pakistan is ready to start the work on the project once international sanctions against Iran are removed.
The minister said that an LNG terminal is under construction at Port Qasim in Karachi by Engro Pakistan which as per contract will be ready by the end of March 2015, but the Ministry of Petroleum and Natural Resources has urged the company to speed up the construction work and the contractor has assured the government that LNG terminal will be ready by January 2015 so the country will receive the first supply of LNG in January 2015.
He said that in first phase the country will start importing 200 MMCFD of LNG and in next phase it will go to 400 Mmcfd while the terminal under construction at Port Qasim will have the capacity to deal with up to 650 mmcfd of LNG. The move to import LNG for CNG sector is aimed at saving the CNG industry that has invested Rs 450 billion but is on the brink of financial collapse, especially in Punjab.
Khaqan abbasi said: "At present, about 3.7 million vehicles are equipped with CNG kits, but the government is unable to meet the rising demand of domestic and industrial sectors. With the start of LNG import for CNG sector about 300 MMCFD of gas being used for the sector will be secured for power generation or fertilizer sector which will also help grow the economy. The decision is also expected to save up to $2.5 billion foreign exchange being used on the import of expensive crude oil. The government is expecting that within coming few years the number of CNG converted vehicles will touch 4.5 million mark."
The government is ready to facilitate each and every party interested in supplying LNG to Pakistan and in this regard an LNG terminals at Gwadar port is also under consideration which will have a total capacity of handling one BCFD of the commodity, he added. The ministry of petroleum had sought fiscal incentives, including exemption of imported LNG from sales tax and gas infrastructure development cess (GIDC) to make it affordable and keep a 30% difference between prices of petrol and CNG. Currently, all bulk buyers of natural gas are paying GIDC at the rate of Rs 300 per million British thermal units (mmbtu) and a 17% sales tax.
Speaking on the occasion, Ghiyas Abdullah Paracha, senior leader of APCNGA, said that the government decision will get a warm response from masses and the CNG community as it will ensure jobs for four hundred thousand people, help 3.7 million owners of CNG converted vehicles to save time and money, reduce fares, oil import bill and pollution, he added. Paracha said the decision has rescued a Rs 450 billion investment of CNG which will send a very positive signal across the globe.
He said that CNG stations across Punjab would become operational soon, helping investors as well as masses while the CNG outlets in the provinces of Sindh, Balochistan and Khyber Pakhtunkhwa would continue to get locally produced natural gas according to Article 158 of the constitution. Paracha said that import of natural gas from friendly countries was not possible due to international pressure and other considerations therefore LNG has emerged as the only option to bridge the gap between demand and supply and that any delay would hit the economy. He said that LNG would be 30 to 35 percent cheaper as compared to the petrol.
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