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Progas to import LNG for winter

July 20, 2012

Gas valve—File Photo
Gas valve—File Photo

ISLAMABAD: Expecting severe gas shortfall in coming winter and resultant power crisis, the government is trying to start import of liquefied natural gas (LNG) by allowing the two gas utilities to purchase it from the open market through usual letters of credit (LCs).

The new scheme of things is being visualised in the wake of expected gas shortfall of over 2 billion cubic feet per day (bcfd) as about 1bfcd of gas was expected to be consumed by the residential consumers alone while transport sector was already facing a three-day closure in Punjab and Khyber Pakhtunkhaw and two-day in Sindh and Balochistan.

The direct imports by a subsidiary of the two gas utilities has been conceived on the request of All Pakistan Textile Mills Association (Aptma) that had heavily suffered last year in the form of low production and reduced exports owing to increased gas cuts.

The fertiliser production has already been affected owing to diversion of gas to power sector.

Informed sources said that since the winter season would also witness lower water releases from dams, the power generation was expected to suffer on all counts.

It was in this back ground that the prime minister had constituted a committee last month comprising federal secretaries and Aptma and other private sector representatives to ‘think out of box solution’ so that immediate work could be initiated for import of LNG as the forthcoming winter would be difficult to pass without significant augmentation of gas supplies.

Given the looming general elections, the prime minister is reported to have advised the ministries of finance and petroleum that political opponents could use gas shortfall as election campaign against the PPP.

It has, therefore, been decided to empower Progas — a subsidiary of the SSGCL and SNGPL — to import LNG under the umbrella of the federal government and act as purchaser.

The LNG so imported would be transmitted into the transmission system of the two utilities on existing LPG terminal by retrofitting.

The Pakistan National Shipping Corporation (PNSC)’s ships or its contracts with other shipping lines would be used for transport of LNG from abroad — most probably from the Gulf market. The ministry of ports and shipping would be required to allow LNG import on existing terminals for the short term gas imports.

Progas would be allowed to purchase LNG directly from international upstream suppliers through international competitive bidding. SSGCL and SNGPL would purchase the imported quantities on a back to back basis.