ECC approves yearly capacity allocation of PGPL LNG terminal to private importers

Aftab Ahmed

Islamabad: Economic Coordination Committee (ECC) on Tuesday approved excess capacity of second LNG terminal to private parties on short term basis for year.

CNG, fertilizer, industry and power sector are trying to get allocation of unutilized capacity of second LNG terminal.

The industry officials say that it would not be feasible for the private sector to utilize capacity for year and add that government should allocate capacity for at least one year for proper planning of LNG imports and marketing the product. However, monopoly of SNGPL and SSGC would be at risk as the private shareholders have always been lobbying to keep entire pipeline capacity with these companies.

The private parties would break the monopoly of these state run gas utilities which losses are high due inefficiencies and gas theft. Sources told that government would offer excess capacity of Terminal(s) to private parties on short-term 3 month forward visibility basis, keeping in mind the increasing utilization by GoP itself. Cabinet Committee on Energy in its meeting held on June 20, 2020 had considered Third Party Access (TPA) to LNG Terminals- Excess Capacity and Government Contracted Un-utilized Capacity.

In the matter, Federal Cabinet in its decision taken on July 1, 2020 referred the matter to the Economic Coordination Committee (ECC) for further discussion in detail along with the earlier decision on third parties use of excess capacity.

The discussion in the Cabinet remained on revenue sharing while maintaining the priority rights of government on use of contracted capacity. Given that sale of un-utilized government contracted capacity has a direct bearing on excess capacity. Regarding providing TPA to un-utilized GoP contracted capacity of 2 Terminal, the cost viable option with government would be to offer such capacity of Terminal(s) to private parties on short-term 3 month forward visibility basis, keeping in mind the increasing utilization by government itself.

While offering un-utilized capacity to third parties, government will continue to have priority rights of Terminal) utilization and maintain operational flexibility to be agreed in lending/ borrowing agreement for comingled cargoes, petroleum division said adding that it is important to highlight that provision of TPA to terminals may result in shift ox some bulk consumers to private suppliers thus increasing take-or-pay risks for GoP.

Therefore, it would be not prudent to make any long-term commitments for sale of un-utilized capacity, Petroleum division informed the economic coordination committee (ECC). At present two LNG Regasification Terminals are operational in the country.

Total physical capacity of Terminal-1 and Teimminal-2 is 690 MMCFD and 750 MMCFD respectively. For Terminal-1, SSGCL has contracted re-gasification capacity of 630 MMCFD with a peak capacity of 690 MMCFD on a best effort basis as and when required and is utilizing it fully through PSO contracted term cargoes.

For Terminal-2, PLTL has a contacted capacity of 600 MMCFD with a peak capacity of 690 MMCED on reasonable endeavor basis, as and when required. At Terminal-2, Pakistan LNG Limited (PLL) is importing two LNG cargoes per month (nearly 200 MMCFD) on term contract basis whereas additional LNG imports are made through spot tenders to meet gas requirements of the country.

This 2d LNG Terminal is under-utilized with average utilization of nearly 62% and 51% during FY 2018-19 and FY 2019-20 respectively, with the drop in demand primarily on account of COVID-19. Terminal utilization may go above 70% with start of 150 MMCFD of RLNG to Karachi Electric (KE.), on firm basis, expected in March 2021.

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