Thursday, October 6, 2022

LNG users Pay Extra $99 Million

State gas companies have imposed an additional $99 million charge on gas (LNG) consumers to maintain their monopoly.

Although the private sector is ready to use the terminal’s idle capacity over the past five years, state-owned gas companies want to maintain control of the LNG market.

State-owned companies received a capacity of 600 million cubic feet per day (mmcfd) of LNG at the second LNG terminal. However, they could not use it fully and the private sector was also not allowed to import LNG at its own risk and expense.

Due to the terminal’s unauthorized capacity, according to authorities, a cumulative charge of $99 million has been passed on to gas consumers over the past three years.

Consumers paid $20 million in the financial year 2017-18, $34 million in 2018-19, and $44.3 million in 2019-20.

The Auditor General of Pakistan already considers this fraud in his report to the federal cabinet.

The second LNG terminal has excess handling capacity that can be auctioned off to the private sector. The federal cabinet approved the private sector in July 2020 to import LNG. However, the decision could not be implemented.

According to the authorities, Pakistan could save and earn around INR 78 billion a year if the government allocates 200 mmcfd of the terminal and pipeline capacity to private sector companies because of the low terminal tariff, transportation tariff for shipping companies. Sui gas, payment of taxes to the government, and savings on the import bill.

The energy sector is reluctant to accept LNG supplies and the Cabinet Energy Committee has also exempted LNG-based plants from the guaranteed sale.

Furthermore, Sui Northern Gas Pipelines Limited (SNGPL) and PLL have not signed a gas supply contract. Therefore, at times the supply of LNG puts the pipeline network at risk due to the reluctance of consumers to receive expensive supplies of gas.

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