ISLAMABAD: Pakistan on Wednesday said the construction of Iran-Pakistan gas pipeline was currently in progress and would be completed by the end of 2016 or early 2017, but the first shipment of liquefied natural gas (LNG) expected by March 31 this year would be provided to the transport sector.

Speaking at a news conference on Wednesday, Petroleum Minister Shahid Khaqan Abbasi said the negotiations with Iran were in progress to amend the bilateral agreement to cater for the change in gas delivery date from Dec 31, 2014 to 2016-17.

Responding to a question on penalties for delayed project implementation, the minister said penalties have not been imposed as yet by Iran and talks were still going on to amend the agreement to incorporate new schedule.

CNG sector to be first beneficiary of LNG import

He said it was natural for Pakistan to import gas from Iran because it was a cleaner and cheaper fuel that could be easily transported and was currently linked to cities and villages throughout the country and the industry, fertiliser and household had become dependent on gas. “So we see not just one but three or more gas pipelines coming from Iran in the future,” he said.

He added that the government considered different ways to develop the project and finally decided to build 700-kilometre Gawadar to Nawabshah pipeline coupled with an LNG terminal at Gwadar for which the government has nominated a company that has signed a protocol agreement with a Chinese firm to undertake Gwadar-Nawabshah pipeline. The remaining 70km between Gwadar to Gabd border point with Iran would be developed separately by Pakistani contractors.

CNG sector’s revival: Abbasi said petrol crisis was overcome by taking effective measures and the first LNG shipment will reach the country on March 31.

He said the compressed natural gas (CNG) was an important part of the country’s energy mix and efforts were under way to revive the industry as early as possible. He said the first shipment would most probably be provided to the CNG sector.

Responding to a question, he said the government was holding talks with existing independent power producers for conversion to LNG instead of diesel or furnace oil, but he agreed that no decision has been reached yet.

He said the IPPs would not be liable for 100 per cent take or pay of LNG, and gas quantities beyond their need would be diverted to the CNG sector.

To a question, he said sufficient stock of diesel and furnace oil has also been ensured.

The CNG sector has been allowed to import LNG and the government will transport it to provide CNG and alternate fuel to consumers, the minister said. Pressure on petrol would be reduced with the availability of CNG. Additional CNG would also be available soon.

Rising petrol usage: Petrol consumption in the country was increasing with each passing day due to falling prices and selling of 40,000 bikes a month, he said, adding that around 500,000 motorbikes were sold last year.

He said no CNG station would face closure after start of LNG import. The price of CNG would be deregulated and linked to crude oil so that its prices would be 30pc cheaper than petrol. The move will have a positive impact on budget of masses, environment, oil import bill and job market, he added.

He said revival of CNG would help establish an alternative fuel system which will not be affected by petrol scarcity or volatility of the market, hence providing relief to the masses. He appreciated the CNG sector for taking initiative to import LNG to overcome crisis.

‘No GIDC’: “We have offered fiscal incentives for import of LNG so that the once vibrant sector can boom again,” he said, adding that the LNG for CNG would not be liable for gas infrastructure development cess (GIDC) and the sales tax would be kept at 5pc instead of normal GST rate of 17pc.

Ruling petrol crisis in the future, the minister said sufficient stock of diesel and furnace oil had also been arranged. He said arrangements have been made in view of expected reduction in oil prices next month and rising demand of petrol.

Petrol consumption in the country since January 2014 has increased from 9,000 tonnes a day to 15,000 this month, he said. For February, the government has projected an estimated daily demand at 19,000 tonnes.

He said petrol consumption was recorded at 450,000 tonnes this month, and expected to touch 540,000 tonnes next month because of price reduction.

Diesel consumption during the past year also increased by 12pc, and the government was taking all necessary steps to meet the future requirements, he said.

Published in Dawn, January 29th, 2015

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