ISLAMABAD: The private sector has asked the Oil and Gas Regulatory Authority (Ogra) and the federal government for implementing equitable tariff regime for all companies including the public sector to transport LNG through pipeline of gas utilities.
On Thursday, the Ogra arranged a public hearing on Sui Northern Gas Pipelines Limited's petition for determination of transportation and distribution tariff for shipper/transporter for financial year 2020-21.
Around 40 participants from the private sector took part in the public hearing, and raised serious questions over various heads of transportation and distribution tariff. The private sector urged that the new transportation tariff regime should also be applicable across the board.
They said that the private sector should not be financially burdened by charging various transportation tariffs.
The representative of private sector also raised various questions such as imposition of penalty, capacity payment, and application of tariff for all companies from the public sector as well. Gas companies are asking for permission for charging capacity payment and tariff as well, even if it denies pipeline capacity for any reason, and why the private sector should pay tariff to gas utility, which bars them to use pipeline capacity in any case, they said. It was the first time that a public hearing was held to determine tariff for imported gas under third-party access rules passed by the Ogra for enabling the private sector to import their gas.
The UGDC Chief Executive Officer (CEO), Ghiyas Paracha, said his company had been struggling for four years to import gas but hurdles were created, and therefore, efforts could not yield results.
He said, "There are several foreign companies who are willing to work in the LNG sector in Pakistan, and the UGDC is a model for them, and the delay in imports is also discouraging them."
Paracha said that the tariff of transportation of LNG should be on equitable basis for both private and public sector companies. He said that the gas utility had demanded to charge insurance fee from third party.
He maintained gas utility should clarify the benefits of this insurance policy. He also opposed the legal professional charges claimed by the SNGPL to charge from the third party. Expressing his fear, he said that the gas utility would use the funds collected from third party against them in legal disputes.
He asked for removal of this head from the tariff.
He said retainage charges claiming by gas utility in transportation tariff were not clear.
He explained that they had no experience of such example in the world as the LNG terminal operators were already receiving retaining charges.
He also requested the regulator to issue a final decision instead of provisional decision regarding transportation tariff.
He said that it would be difficult for a third party to recover dues form the consumers, if there was a change in a decision on some later stage.
He also opposed tariff on account of "doubtful debt".
He explained that third party would be making advance payment, and therefore, the regulator should not allow recovery on account under this head.
He requested the Ogra to allow equitable tariff regime for private and public companies, otherwise, the private sector would not be able to import LNG due to high tariff regime.
Paracha urged to facilitate the private sector to import cheaper LNG in a bid to facilitate the consumers.
Shahid Sattar representing the All Pakistan Textile Mills Association (APTAMA) also endorsed the view point of Paracha. He said a final decision on transportation tariff rather than provisional one must be implemented. He said that it would also be difficult for textile sector to recover dues on products, after they were exported.
"Textile industry is also interested in import of LNG as it required 350mmcfd gas to meet the requirement," he said.
He said that the private sector should also be facilitated to import cheaper.
Saqib Aziz, representing Fatima Fertiliser, also raised question over the tariff claimed by the gas utility.
He said that market should be open for private sector.
Arsalan Ahmed, representing JS Global said that the current mechanism of transportation proposed by the gas utility would make it difficult for the private sector to import gas.
If there is a difference in transportation tariff, then the government should have to give subsidy. He said that the industry should be auditable.
The SNGPL Managing Director, Amer Tufail, said that it was a historic day that third party model of open access was being introduced.
He said that the SNGPL had requested to allow charge the tariff for use of capacity pipeline.
The SNGPL General Manager (GM) Regulation, Kamran, pleading the petition, said that they had requested a tariff to transport gas from pipeline network. He said that they had demanded cost which the company requested the Ogra to allow in review motion. He said that there should be a decision in neutral market price. He said that retainage would be actualised by the end of the year. Therefore, this issue would be resolved. He expressed fears, the SNGPL consumers would be shifted to the third parties, due to uniform transportation tariff.
He said that the SNGPL was operating on ring-fenced regime based on supply of indigenous and imported gas.
Shifting of consumers to third party, he said that it would result in lowering throughputs leading to higher tariff of gas for the consumers.
Copyright Business Recorder, 2020