CCoE takes up capacity, LNG terminals today

Published May 20, 2021
Gas companies are reported to have opposed pipeline capacity on grounds that new terminals would take away their existing customers instead of securing LNG supply contracts with fresh consumers. — Reuters/File
Gas companies are reported to have opposed pipeline capacity on grounds that new terminals would take away their existing customers instead of securing LNG supply contracts with fresh consumers. — Reuters/File

ISLAMABAD: The government has called a series of back-to-back meetings to facilitate allocation of pipeline capacity and tie-in points to new upcoming liquefied natural gas (LNG) terminals.

The issue would be first taken up at the meeting of the Cabinet Committee on Energy (CCoE) on Thursday. To be presided over by Minister for Planning and Development Asad Umar, the CCoE would be given an update by the Ministry of Maritime Affairs (MOMA) on the progress of establishment of new LNG terminals.

The MOMA would inform the CCoE that the board of directors of Pakistan Steel Mills (PSM) had “in principle approved the proposed lease of land to Sui Southern Gas Company Ltd (SNGPL) for establishment of tie-in point. The board further directed that (the managements of) PSM and SSGCL should negotiate the terms and conditions of the lease”.

Ogra will separately hold a facilitation session on Friday with CEOs of SSGCL, SNGPL, PSO, Pakistan LNG Ltd (PLL), Tabeer Energy and Energas

However, the matter relating to allocation of pipeline capacity will also come under discussions in view of certain impediments from the gas companies. As per decision of an inter-ministerial meeting, another small group of ministers for planning, finance, maritime affairs and special assistant to prime minister on petroleum and relevant secretaries and chief executives of SSGCL and SNGPL would also meet on Thursday to settle matters relating to allocation of pipeline capacity.

The Oil & Gas Regulatory Authority (Ogra) would separately hold a facilitation session on Friday with managing directors and chief executives of SSGCL, SNGPL, PSO, Pakistan LNG Ltd (PLL), Tabeer Energy and Energas and director general gas of Petroleum Division for timely development of LNG terminals by Tabeer and Energas.

The CCoE would be informed that Port Qasim Authority (PQA) had issued letters for extension in the time of final letters of interest for two months ie until July 20, 2021 for establishment of LNG terminals.

In recent meeting on the issue, the gas companies are reported to have opposed pipeline capacity on grounds that new terminals would take away their existing customers instead of securing LNG supply contracts with fresh consumers, thus negatively affecting the revenue stream of the gas utilities.

However, the Oil and Gas Regulatory Authority (Ogra) and the CCoE have made it clear to the gas companies that under third party access rules, no customer or supplier could be barred from gas supply contracts and that was actually at the centre of the reform programme to end monopoly and facilitate competition.

In a report to the CCoE, the inter-ministerial committee had said that the federal cabinet had on Aug 2, 2019 allowed five interested investors to be issued provisional letters of intent (LoIs) who have completed Quantitative Risk Assessment (QRA) on the sites assigned to them. Therefore, PQA issued LoI to all five terminal operators.

Subsequently, two terminal operators Energas and Tabeer Energy accepted the terms and conditions and deposited $2 million as part of concession fee out of total $10m concession each and remaining $8m to be deposited upon signing of implementation agreement.

The report said the Ministry of Maritime Affairs in collaboration with Petroleum Division facilitated the new LNG terminal developers in securing no obejction certificates from various ministries and departments, for expeditious completion of new LNG terminals.

The CCoE would also review the latest update on circular debt position, a report on power plants operated in violation of merit order and its resultant burden on consumers and the exchequer and the reasons thereof. It will also discuss proposed revision to the closure of power plants of about 3,500MW in two phases approved by the federal cabinet.

The CCoE would review auction plan for Renewable Energy (RE) projects and a legal opinion from the Ministry of Law and Justice regarding the National Electricity Policy and RE projects and on gap analysis in the regulatory, institutional and policy framework of the power sector.

Published in Dawn, May 20th, 2021

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