LNG to be imported from abroad
Staff Report

ISLAMABAD—Ministry of Petroleum and Natural Resources has given a green signal to two foreign companies for inception of LNG terminals - both offshore and onshore in the country as both parties have managed to receive a no objection certificate from the ministry for onboard regasifaction and transmission of LNG through a sub sea channel for one year starting from November this year, it has been learnt.
Sources told Online on Tuesday that a group with strong political, bureaucratic and military connections is all set to hold sway over the LPG as well as LNG markets in the country. Even though the federal cabinet has yet to give mandatory sanction to policy guidelines laid down by the petroleum ministry for the inception of LNG terminals - both offshore and onshore, Associated Group of Iqbal Z Ahmad and a Houston based Excelerate Energy has managed to receive a no objection certificate from the ministry for the onboard regasification and transmission of LNG through a sub-sea channel for one year starting from November this year.
They said that Iqbal Ahmed got accepted his proposal by top quarters regarding the building new berths for import of LPG and LNG by public sector Sui Southern and Sui Northern Gas Companies instead of his firm as planned earlier. And now, Iqbal will import LPG and LNG for distribution across the country, they said.
They said that the original policy envisages zero customs duty and sales tax on plant, equipment, materials and machinery provided that the LNG developer or owner and operator have obtained a licence from the Oil and Gas Regulatory Authority (OGRA) for setting up of an LNG terminal.
This facility will be available only to the LNG import projects commissioned within 10 years.
Sources said that under the policy, an LNG import project will either be an integrated project under a single LNG developer who would be responsible for purchase, transport to the terminal and supply regasified LNG (RLNG) to the domestic market, or an unbundled project under which different parties would be involved in import, regasification and sale of RLNG.
They said under the Energy Security Action Plan, the gas utilities (SSGCL and SNGPL) would be facilitated to import LNG through private sector on build, own and operate (BOO), build, own, operate and transfer (BOOT) and build, operate and transfer (BOT) basis to meet the gap up to 2010 and continue to fill the same thereafter. The Approximate cost of this project stands around 200 million US dollars, now.
The total production of local LPG about 1500 metric ton per day that contributes 0.5 percent of total energy supply mix which is insignificant as compared with other competing fuels. There is thus an urgent need to make concerted efforts to increase contribution of LPG in the total energy, they said.
They said that the Ministry of Petroleum had move the summary for ECC of the Cabinet 1st November 2005 for LPG imports domestic LPG production has always fallen short of LPG demand. The gap in demand and supply has to be met through imports. However, they said, the volatile LPG prices in the international market coupled with 5 % custom duty and 15% GST has made import of LPG prohibitive. To enhance availability of LPG and to ensure sufficient supply of LPG in the Earthquake affected areas, the 5% custom duty and 15% GST on LPG imports need to be waived off.
But through the pressure tactics and personal interest, sources said, Iqbal Z. Ahmed was instrumental in blocking this proposal through his personal friendship with Mr. Abdullah Yousuf ex-Secretary Petroleum and presently Chairman CBR as per case no. ECC-25/2/2006 dated 10-2-2006 LPG production and distribution policy.
"CBR did not support the proposal for waiver of Custom Duty and GST on import of LPG. It was pointed out that any such concession could be looked into, separately, as a budgetary proposal. It was observed that tariff structure should not be made a part of such policy guidelines," they said.
It May be mentioned that since LPG is used by common/middle class living in Azad Kashmir, Northern Areas, FATA and backward areas of Balochistan, Since Pakistan was producing 1500 tons of LPG per day the import requirement not have been more than 2000 tons per day in order to meet the shortfall in the country why on such a meagre issue the common man was deprived from this facility by just a stroke of pen.
It seems the OGDC wants to bring domestic prices at par with import rates. The hike may not contribute much to a company earning Rs. 35 billion plus profit but provides a big windfall to Iqbal Z. Ahmed and other smaller players like Attock Grou and Hashoo Group. Many producers had raised LPG prices to over Rs. 25,000 per ton. The producers had raised the prices to Rs.20,000 from Rs.17,000 per ton this year.
Mr. Iqbal Z. Ahmed was also instrumental in allowing the usage of LPG in vehicles due to which for the first time the prices of LPG has risen in slack period (summer from Rs. 17,000 to Rs. 27, 000 per metric ton) which is also given him a windfall profits, they said.
Sources said that Abdullah Yousaf as Secretary Petroleum 10 per cent deemed duty was imposed on HSD, Kerosene, Light Diesel Oil (which is used by the poor farmers for tube wells).
They said that all the benefits were given to the four private sector refineries and one private public refinery to improved their reconfiguration which comes to billions of rupees per year where common man is contributing to their kitty which till to day has not spent a single penny on those projects and all the profits and benefits are taken away by them.
The introduction of ethanol (E-10 fuel) this policy is also made benefit a few suppliers it is totally uneconomical to use it in motor gasoline because the price of motor gasoline at ex-refinery rate is Rs. 27 per litter while the rest is all government taxes etc. while the cost of ethanol oil which is a by product of sugar industry costs Rs.33 to 35 per litter ex-distillery, they said.
But, the government of Pakistan is surplus in motor gasoline and government is exporting motor gasoline at through away price. Motor gasoline is also been hard hit by CNG, LPG and now ethanol oil. It is advisable to the government that they should bring down the taxes bracket on motor gasoline by Rs.5 to 10 so that it can become affordable and the import of HSD will also be affected and Government of Pakistan will save million of dollars in imports.