Govt okays major changes to LNG policy

Published August 20, 2022
<p>Finance Minister Miftah Ismail presides over a meeting of the Economic Coordination Committee (ECC) on Friday. — PID</p>

Finance Minister Miftah Ismail presides over a meeting of the Economic Coordination Committee (ECC) on Friday. — PID

<p>A VIEW of the deep-water container terminal at Keamari is seen in this photo. The ECC on Friday recommended the release of held-up consignments that arrived between June 30 and July 31 with a surcharge payment.—Dawn / File</p>

A VIEW of the deep-water container terminal at Keamari is seen in this photo. The ECC on Friday recommended the release of held-up consignments that arrived between June 30 and July 31 with a surcharge payment.—Dawn / File

ISLAMABAD: Ahead of Prime Minister Shehbaz Sharif’s visit to Doha next week, the Economic Coordination Committee (ECC) of the Cabinet on Friday approved major changes to the Liquefied Natural Gas (LNG) Policy to remove restrictions on upcoming private sector LNG terminals to provide their part capacity to the government.

The meeting of the ECC, presided over by Finance Minister Miftah Ismail, also formally approved the lifting of an import ban on all the 33 categories of goods covering more than 860 products and tariff lines.

Earlier on July 28, the ECC had approved the lifting of the ban on all but three categories—finished units of cars, cell phones, and home appliances. However, PM Sharif did not agree with the move, and hence the cabinet did not endorse the ECC decision.

Ban on import of over 860 products, tariff lines lifted

However, on the demand of the International Monetary Fund (IMF) ahead of its board meeting on a bailout to Pakistan, the finance minister announced on Thursday the ban to be removed on all products. “Owing to serious concerns raised by trading partners on the imposition of the ban and considering the fact that the ban has impacted supply chains and domestic retail industry, the ECC decided that ban may be lifted on all the items. Further, the ECC recommended release of those held-up consignments arrived after June 30 up to July 31, 2022 with payment of surcharge,” an announcement said.

The ECC approved major changes to the LNG Policy 2011 under which it removed a key sticking point of the upcoming private sector LNG terminals on merchant model to facilitate Qatar’s investment in Pakistan’s LNG supply chain including terminals and LNG supplies ahead of Prime Minister’s visit to Doha next week.

In doing so, it also allowed all LNG terminals, including those already operational, to utilise their spare capacity that is not contracted by the government. As a result, existing gas pipeline capacity for new terminals may be limited.

The ECC decided to replace Article 6.2(a) of the LNG Policy, 2011 with amendments that provide Third-Party-Access (TPA) to new LNG terminals and associated facilities developed by the private sector without any government guarantees or off-take commitments on an optional basis on negotiated tariff with first right of use for terminal developers, operators, and their associated undertakings. This optional TPA will be for a period of 20 years only, from the date of commencement of construction, and thereafter, every terminal will be subject to mandatory TPA, whether it is regulated TPA or negotiated TPA, following the principle of use-it-or-lose-it (UIOLI).

Furthermore, terminal developers, operators, and associated undertakings will submit relevant information to the Oil & Gas Regulatory Authority (Ogra) for information and market monitoring, including capacity utilisation and terminal tariff (only in the case of TPA).

The TPA for the un-used capacity of LNG terminals contracted by public sector entities will be mandatory and regulated by Ogra.

Published in Dawn, August 20th, 2022

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