ISLAMABAD - A parliamentary committee was Friday informed that to overcome constraint in LNG supply for the power generation, during the winter season, enough furnace oil has been imported to meet the electricity demand.
The spot prices of LNG in international market are much higher than furnace oil rates that’s why we have purchased it in abundance, secretary Petroleum Division Dr Arshad Mahmood said while briefing a Senate panel here.
Meeting of the Senate Standing Committee on Petroleum, which met under the chairmanship of Senator Muhammad Abdul Qadir, was told by the secretary that” We are running out of storage capacity for furnace oil,”. The entire imported furnace oil has been provided to IPPs for power generation, he added. The price of LNG spot purchases these days is much higher than the furnace oil and the government owned Pakistan LNG Limited (PLL) has failed to attract any bidder for the delivery of LNG during December 2021 and January 2022. To overcome the shortage of LNG, the government has imported enough furnace oil for power generation. It is worth to mention that the per unit generation cost of furnace oil during October 2021 was Rs 21.2273 per unit, while the cost of RLNG based generation was Rs 16.7482 per unit.
Dr Arshad said that the idea of providing gas through pipeline has vanished all around the world. Even in India the supply to domestic consumers through pipeline is being discouraged, he added. “We have to move to cylinder gas for domestic consumption” the secretary maintained. In Pakistan the pipeline gas is supplied to 28 percent population, while the remaining 72 percent are relying on cylinders or other alternative fuel, he said.
The Committee members expressed their displeasure and staged a token walkout against the constant absence of Energy Minister in the committee meetings.
At the outset, Committee deliberated upon present status of Implementation of Third Party Access (TPA) to the private sector with regard to the use of LNG terminals.
Secretary Ministry of Energy (Petroleum Division) while briefing the committee said that the private sector is engaged in development of 2 more LNG terminals. TPA Rules and Network codes have been developed to provide access to pipeline network to the private sector investors and consumers. We have laid a 42” dia 1100 KMs long RLNG pipeline. He further informed that planning for another RLNG pipeline is in advanced stage to transport the imported volumes of RLNG from the upcoming LNG plants of the private sector.
Chairman Committee said that “Why don’t we let private businesses take responsibility of importing RLNG in the country. We should definitely go towards private parties for this purpose.”
On the question of market liberalization in the LNG sector, Secretary Ministry of Energy (Petroleum Division) informed that government is 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 LNG virtual pipeline. He said that Petroleum Division is also working on new LNG Policy for improved policy and regulatory framework with special focus on private sector participation in the LNG sector. Despite the fact that existing LNG terminals are running at peak capacities and utilization of terminals is way higher than global average, PLL is discussing the Third-Party Access to accommodate private sector. There are numerous legal, commercial/financial, operational and technical issues that need to be addressed for allowing TPA to private sector. Secretary Petroleum was of the view that PPRA rules are not ideal for on spot procurement of RLNG supplies. PPRA rules should be amended.
Chairman Committee assured the officials that we will write to Finance Ministry on the matter. “We are here to help and we will do whatever we can to assist Ministry in this regard. This is not something which cannot be fixed” commented Chairman Committee Muhamad Abdul Qadir.
While discussing the problems faced by people of Quetta, Ziarat and other areas where the weather reaches below freezing point during winter, chairman Committee said that people living in those areas should not be charged higher slab rates, as their consumption is high only during winter months of extreme cold. “People are being charged high just because of this slab formula. Appropriate measures should be taken to provide relief to these people. They cannot afford to pay the gas bills during these months.”
Chairman Committee suggested that Ministry officials should sit down with local representatives and devise a way out and introduce subsidized rates for these specific areas. Chairman committee directed officials to come up with a plan in the next meeting of the committee.