Setting up of CNG outlets: Ogra, PD in row over issuance of provisional licences

The Oil and Gas Regulatory Authority (Ogra) and the Petroleum Division are entangled in a serious tiff over the issuance of new provisional licenses to private and commercial entities across the country for setting up CNG stations.

On October 29, 2019, the federal government lifted moratorium on new CNG connections but it is yet to come with a policy guideline for issuance of new licenses for setting up CNG stations. A letter of Petroleum Division to managing director Sui Northern Gas Pipelines Limited (SNGPL) and chairperson Ogra stated," The CNG consumers may also apply for new connections on RLNG supply."

In line with the federal cabinet's decision on April 12, 2017, Petroleum Division has lifted ban on new RLNG connection for industrial, commercial and captive consumers etc. The CNG consumers may also apply for new connections on RLNG supply.

Sources in Petroleum Division said that Ogra has sought the federal government's CNG policy pertaining to issuance of fresh CNG licenses. On July 9, 2019, the oil and gas regulator argued before the Petroleum Division that the federal government should provide a clear guideline on issuance of licenses to new CNG stations.

Petroleum Division, however, opined that it does not need any guideline on issuance of CNG licenses and Ogra as a regulator of oil and gas sector may take decision in this respect after keeping in view the gas situation in the country.

Currently, the CNG sector has been regulated under the OGRA Ordinance, 2002 and CNG (Production & Marketing) Rules, 1992 since March 15, 2003. The Ogra has granted around 6,154 CNG provisional licenses for establishment of CNG stations across the country since inception and around 3,500 CNG stations have acquired CNG marketing licenses for their operation which contributed an overall investment of approximately Rs 90 billion (direct and indirect) in the CNG sector.

At present, there are 186 CNG stations operational out of 1,186 stations in Punjab and the government already allowed CNG sector to import LNG privately to keep the prices of the gas cheaper than the fuel.

In September 2019, the global energy giant ExxonMobil signed a deal with a private company, Universal Gas Distribution Company (UGDC), to supply LNG to CNG sector.

The move was expected to increase parity between the price of CNG and petrol, reduce fares, save one billion dollars of foreign exchange per annum, convert two million vehicles to CNG, and attract foreign investment for import of CNG kits and cylinders.

Chief Executive Officer UGDC, Ghiyas Abdullah Paracha told Business Recorder that first private LNG cargo is likely to arrive at the Gasport Terminal by end of current month.

He maintained that his company would provide 40 mmcfd RLNG to CNG stations in Pakistan and it would further gain momentum in the months to come. SNGPL is supplying 60 mmcfd RLNG to CNG sector, he clarified, adding those CNG outlets which had inked deal with UGDC will end getting RNLG from SNGPL.

On August 5, 2019, the Oil & Gas Regulatory Authority imposed a ban on the use of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) by all public service vehicles (PSVs), including school vans, to ensure safety of public life and property. While the CNG owners association pledged to challenge the move in the court.

In letters written to the Ministry of Energy, provincial governments, Azad Jammu and Kashmir government, top police officials and CNG associations, the Ogra said it had taken the decision on the recommendations of the Punjab and Sindh governments in accordance with an order of the Sindh High Court.

A parliamentary panel meeting on November 19, 2018 was informed that about 4,215 applications for industrial and 22,605 for commercial RLNG connections have been pending.

Copyright Business Recorder, 2019