SNGPL and SSGC would be importing LPG in bulk quantities. - File photo

ISLAMABAD: Minister for Petroleum Dr Asim Hussain has expressed the confidence that the country will have adequate supplies of Liquefied Petroleum Gas (LPG) as Sui Southern Gas Company (SSGC) is set to acquire the Progas LPG terminal after the court formalities are cleared.

SSGC is the only bidder offering Rs1.6 billion for acquiring state of the art LPG terminal at Port Qasim from banks, but the local share-holders have filed a case in the Sindh High Court.

The officials of the petroleum ministry said that in the next hearing on Sept 13 a settlement is expected to be reached with litigants, the official added.

Talking to Dawn, the minister said all means are being explored to overcome the energy crises and the government is looking to increase the usage of LPG in the energy mix.

He said that one major problem is that the government role in LPG segment is very limited as the whole sector is almost deregulated.

“There are vast untapped areas which are potential LPG markets, and it would gradually decrease our total dependence on natural gas,” Dr Asim said.

However, despite severe shortage of natural gas and even petroleum fuel, LPG consumption has been limited in the country and it is mainly consumed as domestic fuel in areas where natural gas is not available.

“In practical terms we have estimated that the LPG consumption in the country is 5,000 tons,” said Director Gas, Saeedullah Shah, “But unfortunately the local production has dropped to 1,100 tons from around 1,600 to 1,700 tons daily in the year 2004-05.”

To increase LPG consumption, the government is entering the whole supply chain, and in the first phase LPG subsidiary companies have been established by the SSGC and the SNGPL.

A spokesman for the SSGC, Zohair Siddiqui said that after acquiring the Progas LPG terminal, the subsidiary companies of the SNGPL and SSGC would be importing LPG in bulk quantities.

“These companies would be selling LPG in remote and underdeveloped areas where private companies do not make efforts to go,” Mr Siddiqui said.

Though kept secret, the third phase relates to government involvement in LPG business in the production sector.

“The SSGC and SNGPL LPG companies would enter into the bidding for extraction of LPG from various oil and gas fields,” an official of the petroleum ministry said.

He said it is expected that the contract to extract LPG from Kunnar–Pasakhi gas fields in Sindh would be obtained by the consortium of these state-owned LPG companies which would ensure supply of around 120–140 tons of LPG daily.

However, market players have raised objections to the government plans and blame inconsistent government policies for failure to harness the potential of LPG in country.

“The last LPG policy was approved in 2005 and in six years only one LPG filling station for auto sector has been established in country that – in Sialktot,” said Fasih Ahmed, a spokesman for the LPG Association of Pakistan.

“The country recently witnessed severe petrol and diesel shortages -- the CNG load-shedding is being implemented even in summers - but why can’t we have LPG in auto sector.”

He said LPG usage in automobiles is widely consumed across the world and even in Pakistan around 250,000 rickshaws and taxis are running at LPG.

The two Sui gas companies used to operate in the LPG businesses but it was finished in 2001 when the government on the recommendations of the donor agencies decided that both the gas utility companies should rather concentrate on their core business. On the other hand, the LPG Association expressed serious reservations over the decision by the government to enter the market. They say that the government owned companies were operating mainly on subsidies.