PPRA rules not ideal for RLNG imports, Senate panel told

Published November 27, 2021
ISLAMABAD: Amid a gas shortage in the country, a man carries firewood on his motorbike on Friday. — AP
ISLAMABAD: Amid a gas shortage in the country, a man carries firewood on his motorbike on Friday. — AP

ISLAMABAD: The Senate Standing Committee on Petroleum was told on Friday that the Public Procurement Regulatory Authority (PPRA) rules were not ideal for on-spot procurement of re-gasified liquefied natural gas (RLNG) supplies and they need to be amended.

Briefing the committee, Secretary Petroleum Dr Arshad Mehmood said allowing the private sector to import RLNG was difficult due to several bottlenecks in the system.

He added that there were numerous legal, commercial/financial, operational and technical issues that need to be addressed for Third Party Access (TPA) to the private sector with regard to the use of LNG terminals.

Committee chairman Senator Abdul Qadir inquired about the reasons for not allowing the private sector to import RLNG.

The secretary petroleum said that there were issues related to limited pipeline capacity and challenges in allocation of pipeline capacity from Sui Southern Gas Company Ltd and Sui Northern Gas Company Ltd and the Port Qasim Authority’s ability to handle numbers of LNG vessels and night navigation for LNG vessels.

He, however, added that the private sector was engaged in development of two more LNG terminals, and the Petroleum Division was also working on a new LNG policy for an improved regulatory framework with special focus on private sector participation in the LNG sector.

Regarding amendments to the PPRA rules, the standing committee chairman assured the Petroleum Division of sending recommendations to the finance ministry over the matter.

Responding to the queries by the senators regarding market liberalisation in the LNG sector, the secretary petroleum said that the government was focusing on private sector participation in the LNG supply chain, development of new LNG import terminals in the private sector, third-party access to LNG terminals and pipeline network, construction of new gas pipeline from Karachi to Lahore, development of gas storage and an LNG virtual pipeline.

Mr Mehmood informed the committee that the TPA rules and network codes have been developed to provide access to pipeline network to the private sector investors.

“We have laid 1,100km-long 42-inch RLNG pipeline, while the planning for another RLNG pipeline was at an advanced stage to transport the imported gas from the upcoming LNG plants in Karachi to the upcountry consumers,” Dr Mehmood said.

The committee members also asked about the Saudi government’s pledge of investing $14 billion in setting up an oil refinery, Dr Mehmood said that Saudi Arabian Oil Company (Saudi Aramco) and companies from UAE and China have shown interest in such projects after the approval of Refineries Policy 2021, which offers incentivised internal rate of return.

While discussing the problems faced by people of Quetta, Ziarat and other areas where the temperature reaches below freezing point during winter, the chairman committee said that power consumers in those areas should not be charged higher slab rates as their consumption is high only during winter.

Published in Dawn, November 27th, 2021

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