ISLAMABAD: Amid hectic consultations among government agencies, the owners of compressed natural gas (CNG) stations are reported to have made financial arrangements for importing liquefied natural gas (LNG) from Qatar and asked the government to facilitate its sale.

The Universal Gas Distribution Company (UGDC) – a company established by owners of CNG stations by pooling their own resources – has also conveyed to the government that it could open $60-70 million worth letters of credit (L/Cs) for importing three shipments of LNG that would be enough to meet CNG sector’s requirement for at least 45 days. The imports could be arranged in 10 days, it informed the government.

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“We are not at stage of opening L/C through our own resources, having gained required financial strength and can well be in a position to get the LNG in March 2015; the target date set by the government,” wrote UGDC chief executive officer Ghiyas A. Paracha to the petroleum minister.

He requested the minister to direct the government agencies concerned to complete pending works, including regulatory approvals, to enable the UGDC to proceed with opening of L/C in a weak or 10 days.

Mr Paracha told Dawn that owners of 1,350 CNG stations had contributed to the initial paid-up capital required for registration of the UGDC and around 200 more would be joining the initiative soon. He said he had led a delegation to Qatar to examine the LNG supply chain and was impressed with their arrangements and support for Pakistan’s LNG initiative.

This comes at a time when government-owned companies and agencies are yet not clear about supplying imported LNG to independent power producers or other bulk consumers as originally envisaged under various policy decisions. It also shows that the CNG sector in Punjab, which is facing complete closure because of gas shortage, is perhaps the only customer at the moment to consume planned LNG imports and get back into business and protect the government from $272,000 per day penalties to LNG terminal operators after March 31.

However, the CNG industry and Sui Northern Gas Pipelines Limited (SNGPL) need to resolve the issues of distribution charges in line with the decision taken by the Economic Coordination Committee of the cabinet in September last year.

“The government should help settle the issue of distribution charges with the SNGPL to import LNG in line with the timeline set by the government,” Mr Paracha said. He said the SNGPL would act as transporter of imported LNG. “We are ready to bear unaccounted for gas over 4.5 per cent,” he said, adding that the issue should be resolved immediately.

He said the government’s attempt to import LNG to meet demand of various sectors of industries, including the CNG sector, would be helpful in reviving the dying CNG industry worth Rs450 billion with 350,000 jobs, thus stabilising the country’s economy.

In a letter to the Oil and Gas Regulatory Authority (Ogra), the CNG industry said that it was an existing consumer utilising pipeline capacities, including transmission and distribution networks of both the integrated companies. The CNG consumers who are tapped from the systems have contracts of supply of gas with the existing companies.

“Now, with the import of LNG, only the source of supply and ownership of gas is being changed and practically no change is being brought about in the physical gas supply and distribution networks, hence not affecting any new major investment on the part of any party. We are endeavouring to ensure continuity of utilising the existing capacity in the distribution and transmission networks of both Sui companies,” the industry said.

Published in Dawn, February 24th, 2015

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