ISLAMABAD: Terming it a game changer, the government and the All Pakistan CNG Association (APCNGA) say that the use of liquefied natural gas in transport sector will save over $2.5 billion per annum, generate one million jobs, protect Rs450 billion worth of industry and ensure a clean environment, besides providing at least 30 per cent cheaper fuel to consumers.

Speaking at a joint press conference here on Monday with a central leader of APCNGA, the Minister for Petroleum and Natural Resources, Shahid Khaqan Abbasi, said that the two sides had taken a new initiative to use imported LNG as CNG in vehicles. The project will materialise in about 18 months.

“The APCNGA will itself be responsible for the LNG import,” said the minister, adding the government would allocate the pipeline capacity and gas companies — SSGCL and SNGPL — would deliver re-gasified LNG to CNG stations in an open market based environment so that CNG was made available to consumers at 30-35 per cent off the price of petrol.

He said the initiative would ensure uninterrupted supply of CNG to consumers. The initial utilisation would start from 200MMCFD (million cubic feet per day), but eventually 500MMCFD of LNG would be utilised by the CNG sector. “This is a game changer that will provide a big saving to the country in view of lower petrol imports. This will reduce the import bill by $2.5 billion,” he added.

Mr Abbasi said the new initiative would not only protect about 500,000-700,000 existing jobs threatened by domestic gas shortage, but also increase the employment level in the sector to more than one million and free up about 250MMCFD of domestic gas that would be used in power sector to reduce tariff or at least contain its increase.

He said the entire exercise would be done and completed by the private sector and the government would just extend a helping hand by providing it enabling environment and incentives. He said the imported CNG was expected to be 5-8 per cent costlier than existing price. Still it would be 30-35 per cent cheaper than petrol and its supply will be abundant.

He said the government was not entering into any new agreement with CNG owners, rather a third party access policy on LNG was already in place that provided any private party to import and market LNG while using capacity of the gas utilities and being themselves responsible for all system losses.

The minister said the Oil and Gas Regulatory Authority (Ogra) would have no role in pricing with CNG on imported LNG that would operate independently in market based process.

Answering a question, he clarified that the LNG import projects being pursued by the government had nothing to do with the CNG sector.

Petroleum Secretary Abid Saeed explained that given the fact that LNG use in CNG would be a new business, the government would consider exempting the commodity from general sales tax or other taxes so that price differential with petrol remains at least 30 per cent.

Ghiayas Abdullah Paracha, the central supreme chief of APCNGA, said the proposed initiative would save an industry that was on the verge of collapse since 2009, but would now provide a saving of Rs10,000 to Rs15,000 per month to consumers and increase CNG operated vehicles from 3.7 to 4.5 million in one year. He said the government had already allowed import of CNG kits.

Mr Abbasi brushed aside speculations about LNG imports and higher pricing. He said as of now, the government had not discussed prices with any party, not even with Qatar. The world largest LNG supplier was interested in long-term supplies.

He said he had written letters to all party heads in the parliament, including Awami Muslim League chief Shaikh Rasheed Ahmed, explaining all the details and with the offer to bring up any proposal or interested party in the interest of the country to provide LNG but none had responded.

The minister said the government would have to decide over the next three months whether it has to enter into long-term LNG deals or adopt short-term buying option or a medium-term or a mix of all to ensure maximum benefit for the country, but this would be based on recommendation of the transaction consultant.

Mr Abbasi said the construction of LNG terminal was now in final phase and although the investor was required to deliver it by March 31, it was expected to be completed by December or January next year.

In reply to a question, he said it was impossible at present to implement Iran-Pakistan gas pipeline due to sanctions, but the two governments were in touch to find out some alternative.

Published in Dawn, September 16th, 2014