• The role of the private sector in the gas supply chain is hampered
• Right of the UGDC to the allocation of the terminal, gas pipeline capacity protected by the legal framework

ISLAMABAD: The transport sector, which relies on compressed natural gas (CNG), complained to the Prime Minister that it faces unfair treatment and roadblocks from various institutions and government entities in pricing, supply, imports and capacity of pipelines for the transport of liquefied natural gas (LNG).

In a detailed statement, copies of which were shared with the Ministry of Energy and the Oil and Gas Regulatory Authority (Ogra) and the Universal Gas Distribution Company (UGDC) explained the “obstacles to the role private sector in gas supply ”since its creation in 2014.

In a nutshell, the CNG industry is required to pay the highest price for local gas or imported LNG compared to all other consumers and is the first to face a shutdown after a supply shortage and yet it is not allowed to organize its own imports in violation of rules, regulations and laws lest its cheaper imports upset public sector monopolies.

UGDC Director General Ghiyas Abdullah Paracha said the gas shortage amounted to 2BCF (billion cubic feet) compared to the annual supply of 4BCF, the CNG sector as well as several other industries to gas base were badly affected and faced with survival issues. With the government’s decision to promote the private sector in reducing the gas shortage, several representatives of the CNG sector established the UGDC in 2014 as a special purpose vehicle for the import and regasification of LNG and the supply of regasified LNG to CNG stations and other customers using the pipeline of gas companies through which they were already supplied.

“Since its incorporation, UGDC has made tremendous efforts and taken countless steps to secure all trade agreements to deliver regasified LNG to CNG stations and other gas customers,” Mr. Paracha said. .

He said that when the UGDC turned out to be the successful bidder to use the excess capacity of the LNG terminals, the auctions were not successfully concluded by the public sector entities. “UGDC has worked from pillar to pillar for the allocation of pipeline capacity which is the channel par excellence for transporting regasified LNG to CNG stations and gas customers” as permitted by the rules of Third Party Access (TPA) and sought to sign gas transportation agreements with gas companies with the support of the Petroleum Ministry but in substance none of these requests and MoUs were actually approved or signed.

The result has been that due to the unused contract terminal capacity of Pakistan LNG Ltd, a cumulative charge of around $ 100 million (around Rs16bn) has been passed on to gas consumers over the past three years, according to an official working at the rate of $ 20 million in fiscal year 2017-2018, $ 35 million in 2018-2019 and $ 45 million in 2019-2020.

In addition, another import saving of Rs80bn for the government had been wasted in the form of non-availability of gas, regasification fees at LNG terminals, transportation fees to gas companies and tax losses.

“Unlike its productive use, the role of the private sector in the gas supply chain appears to be hampered,” UGDC said, explaining that one or more private sector licensees have been allocated around 200 MMCFD. of terminal capacities to import and regasify LNG, and the corresponding gas pipeline capacities have also been allocated to enable these license holders to transport and supply regasified LNG to gas customers.

Mr Paracha said the actions and results suggested that “the UGDC is not deliberately allowed to exercise its lawful trade and business right – to undertake the gas supply business” although this is the country’s leading private sector gas shipper and was in violation of the laws, Ogra Gas Rules (Third Party Access), 2018.

These rules required Sui companies to offer and facilitate access to available capacity to authorized shippers and to allocate available capacity on a first come, first served basis and to offer and facilitate access to available capacity to shippers. . He warned that the UGDC’s right to allocate terminal and pipeline capacity was well protected by a legal framework.

“It will only be fair and reasonable to honor UGDC’s right in practice as well,” Paracha said, warning that any allocation of pipeline and terminal capacity to an entity on existing gas infrastructure or future in deviation from the above legal framework will not only constitute a violation of the rights of the UGDC, but also constitute a violation of the law.

Posted in Dawn, July 19, 2021