Govt urged not to give additional capacity of LNG terminals to private sector

Published April 25, 2021
The Ministry of Maritime Affairs has asked the government not to allocate the additional capacity available at the LNG terminals at Port Qasim to the private sector.  — File photo
The Ministry of Maritime Affairs has asked the government not to allocate the additional capacity available at the LNG terminals at Port Qasim to the private sector. — File photo

ISLAMABAD: The Ministry of Maritime Affairs has asked the government not to allocate the additional capacity available at the LNG terminals at Port Qasim to the private sector.

The call, which may be seen by many as having been made by the maritime ministry while overstepping its jurisdiction, has invited the ire of the petroleum sector.

In a letter to the Economic Coordination Committee (ECC), the maritime ministry has suggested that instead of providing the additional capacity to the private sector the government needed to establish two new LNG terminals at Port Qasim.

The ministry has warned that the impact of utilisation of the excess capacity by LNG terminal operators and its potential impact on the LNG supply chain must be determined by an independent international consultant. The ministry suggested that it has also to be determined after the recommendations of the independent international consultant whether the excess capacity is available or not. “And if the answer is yes, then what should be the framework which safeguards the interest of the government as well.”

The ministry has jurisdiction over the utilisation of water and the land at port Qasim, but the suggestion has been made over the domain of petroleum division, and the maritime ministry has asked the ECC to forward the recommendations of the international consultant to Oil and Gas Regulatory Authority by (Ogra) to fit the recommendations of the consultants in its Third Party Access (TPA) Rules, which are yet to be notified.

Petroleum division disagrees with maritime ministry

The ministry has also sought delay in the implementation of the earlier ECC decision to allow the private sector to import LNG at the unutilised capacity at the terminals and the gas pipelines.

“Since, both contracts are under review in NAB and until or unless, these two contracts are reopened and rewritten, the TPA would not possible, hence, after seeking the advice from Law Division, the matter may be placed before the Cabinet,” the ministry of maritime affairs has said in the letter to the ECC.

On the other hand, a senior official of the Petroleum Division said that technical issues related to safety, and capacity of regasification of LNG and its transportation through the pipelines of Sui Southern Gas Company (SSGC) were not the domain of the Port Qasim Authority.

“The ECC has already made a decision that the private sector can import LNG and utilise the excess capacity at the terminals as well as the gas pipelines, but delaying the implementation of ECC decision would create serious gas shortages in winters,” the official said, adding that it would take few months for the private sector to materialise their LNG import orders, therefore, the ECC decision should not be delayed.

Earlier in July last year the ECC had approved a summary forwarded by the Petroleum Division and decided that LNG Terminal operators may allocate their additional re-gasification capacity to third parties on commercial basis.

The ECC has imposed certain conditions for allocation of additional capacity to the private sector which include giving priority to the cargoes imported by the government companies.

Meanwhile, the official of the petroleum division said that allowing LNG imports by the private sector would also help in creating competition between the private importers and the current imports who were only the state owned companies, which would help in reducing the import price.

Published in Dawn, April 25th, 2021

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