SIFC body seeks ‘Merit Order’ for gas supply

SIFC-sparks

ISLAMABAD: The Executive Committee of SIFC has directed Petroleum Division to prepare ‘Merit Order’ for supply of gas to industry, fertilizer, power generation, commercial, and domestic consumers, economic benefits of which will be reviewed by the caretaker Minister for Finance, sources close to Secretary Petroleum told Business Recorder.

Caretaker Finance Minister, Minister for Industries and Production and Minister for Energy as well as other relevant Secretaries will define the course for ensuring rational energy pricing and reliability of supply for export industry with the particular focus on: (i) introduction of industrial tariff based on cost of service; (ii) implementation of Weighted Average Cost of Gas (WACOG); and (iii) permission of wheeling at a feasible rate. After due deliberation, the matter will be placed before the AC and later ECC for timely approval.

The Executive Committee was informed that Energas plans to establish the LNG Terminal with re-gas capacity of 750 mmcfd with a shareholding of 49 percent of QG and 51 percent of Energas which has requested for: (i) issuance of OGRA network code; (ii) Tax holiday; (iii) TPA exemption; and (iv) SNGPL GTA.

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Petroleum Division is to convene a meeting with Ministries of Finance, Law & Justice, FBR, OGRA etc. to discuss the issue of incentive for Energas LNG Terminal as per prevailing policy/rules and present a plan in next meeting of EC.

The Executive Committee was further informed that there is no pricing mechanism (subsidies) for the recovery of RLNG cost diverted to domestic segment. Currently, Rs 250 billion is outstanding from previous year’s RLNG diversion. Current year’s projection is Rs 210 billion on account of RLNG domestic diversion.

According to sources, OGRA has been directed to lead as a regulator for devising the plan for provision of virtual LNG in collaboration with Petroleum Division, including finalization of codal formalities for issuance of No Objection Certificate (NOC).

Minister for Energy, Minister for Maritime Affairs, Secretary Petroleum and Chairman OGRA would devise an action plan to fully utilise and optimise existing LNG terminals to import maximum possible LNG, preferably in Business to Business (B2B) mode, without any obligation on part of government. The endeavour’s objective is to enable additional LNG cargoes before onset of winter 2023.

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