Private sector, not govt, imported first LNG consignment


ISLAMABAD: The LNG import mystery got resolved on Thursday when it became known that the private sector, and not the federal government, had imported the first LNG consignment of 147,800 cubic meters. The private sector has thus saved the government from huge embarrassment as the latter failed to meet the deadline of importing LNG by end-March.

The Universal Gas Distribution Company Private Limited and Pak-Arab Fertilizer are the two private sector companies that have imported the 60,000 tons of LNG of which 50 percent will be used by the CNG sector and the other 50 percent by the Pak-Arab Fertilizer Company.

Federal Minister Shahid Khaqan Abbasi confirmed to The News that the said two companies had imported the first consignment of LNG in the vessel that has floating storage and re-gasification facility and ETPL had hired the FRSU vessel for 15 years. “FRSU has already berthed at Port Qasim.”

The minister said that the government will be able to import LNG by April 15 and hoped that the final meeting on the LNG deal with Qatar will be held on April 1, 2015. The minister claimed that among the current contracts for LNG between suppliers and buyers, the Nawaz government will be able to ink flexibility of the contract. It will not be wise to discuss the contents of the LNG deal with Qatar when talks are still under way. However, the minister claimed that the government would be able to strike the best deal.

The private sector has imported the LNG at $8 per MMBTU. Sui Northern will charge 11.5 percent UFG (unaccounted for gas) from the CNG sector. The minister said that the study shows that in the last three and half years, UFG volume at CNG stations in Punjab has been identified as most of the CNG stations are installed at gas distribution system. However the UFG stands at 0.5 percent at all business houses, which are installed at transmission lines. So they will have to pay against said volume of UFG to Sui Northern in the case of using the LNG. The minister said that RLNG that will be used by CNG would be competitive as there will be no GIDC (gas infrastructure development cess) on LNG to be used by CNG and on top of that general sales tax has been reduced to 5 percent from 17 percent on the import of the commodity to be used by the CNG sector.

This will help the availability of CNG in Pakistan at 30 percent parity with petrol. The minister said that at present IPPs are hesitant to ink agreement for using LNG and in case they refused to use the LNG as fuel in power generation, then the government will use the imported LNG in KAPCO and will get the benefit of $300 million per year and the more RLNG will be diverted to the Jamshoro power plant for power generation. It will help lower the use of furnace oil that will provide huge benefit to Pakistan.

The usage of LNG by public sector power plants will help bring down the power generation cost from Rs14 to Rs9 per unit. The said reduction in power generation will ease doing of business in Pakistan. The minister hoped that IPPs that include Halmore, Si, Safire and Orient would provide letter of intent to the government for back-to-back L/Cs for import of LNG vessel. The minister said that the government would import two LNG vessels in a month for power sector. In addition, the private sector will also import LNG. The minister said that for spot purchasing of LNG, the government is in the process of introducing some changes in PPRA rules.