Press release Private sector company allowed to import LNG

Private sector company allowed to import LNG

Islamabad: A private sector firm, Universal Gas Distribution Company (UGDC), was allowed on Wednesday to import or purchase liquefied natural gas (LNG) from international suppliers and enter into commercial sale contracts with consumers for vehicle and industrial use, the country’s first such authorisation.

A formal licence has been issued by the Oil and Gas Regulatory Authority (Ogra) to UGDC for retail sale of LNG to industrial and transport sectors.

The company is a joint venture of about 60 CNG operators led by All Pakistan CNG Association (APCNGA) Chairman Ghiyas Paracha.

The licence was issued under the new gas marketing rules and third-party access regime, introduced last year to gradually deregulate gas business in the country.

The licence will enable the UGDC for import and sale of 25 mmcfd (million cubic feet per day) of LNG through spare processing capacity at the Engro terminal in December.

Mr Paracha, who is also the company’s CEO, said the licence was issued after his firm’s efforts of more than two years and completion of most legal formalities. “Commercial operations would begin very soon,” he said.

He said under legal process, Ogra would not bar any importer, including UGDC, from buying LNG from the government and sell it to end users at its own price, but importers would require permission from Ogra to export LNG to any party before its entry into terminal.

However, he said the licence was first issued to UGDC under the new rules and third-party access regime introduced under Gas Ordinance and Natural Gas Rules 2002 after approval of Economic Coordination Committee (ECC) of the Cabinet and the Council of Common Interests (CCI).

“UGDC will be exclusively responsible to purchase/arrange LNG and re-gasify at EETPL’s terminal or any other terminal with prior permission of Ogra through finance arranged in accordance with SECP (Securities and Exchange Commission of Pakistan) applicable regulations,” Ogra said.

Under “Standard Conditions”, Ogra added, “SNGPL and SSGCL (working with GTA entities) and terminal operators shall facilitate transport of LNG through pipeline infrastructure, applicable service charges, and fair treatment for the licensee as per applicable rules.”

The UGDC will be required to arrange own finance and will bear all risks and liabilities associated with its business. Ogra said the company would not be entitled to seek any revenue requirements and will have no obligation on the part of the government or its subsidiaries or end users of gas.

Mr Paracha said the success of the UGDC and other similar ventures would reduce gas shortages for the CNG industry to half in Punjab and reduce oil import bill by at least $1 billion per annum besides reducing environmental pollution and saving foreign exchange.

He said hundreds of closed CNG stations in Punjab would be revived within a few weeks of availability of imported LNG. He said gas shortage had severely affected the public transport sector and the general public, especially women and children.

The CNG sector has suffered badly due to a 70pc increase in its input cost as the sale of domestic gas to the CNG sector was already linked with the import parity price and not subsidised like other sectors.

The CNG price had dropped to Rs48 per litre when petroleum prices were around $40 per barrel in 2008, but the government fixed its input gas price at 60pc of petrol price and since then, the prices had gone up by more than 30pc.

He said the new venture would reduce the input cost of the CNG sector and bring the CNG price down to Rs35-40 per litre and would provide a new lease of life to the sector.

For media inquiries, please contact:

Universal Gas Distribution Company
Email: media@ugdc.com
Phone: +92 51 111 888 432

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Private sector company allowed to import LNG

A formal licence has been issued by the Oil and Gas Regulatory Authority (Ogra) to UGDC for retail sale of LNG to industrial and transport sectors.

The company is a joint venture of about 60 CNG operators led by All Pakistan CNG Association (APCNGA) Chairman Ghiyas Paracha.

The licence was issued under the new gas marketing rules and third-party access regime, introduced last year to gradually deregulate gas business in the country.

The licence will enable the UGDC for import and sale of 25 mmcfd (million cubic feet per day) of LNG through spare processing capacity at the Engro terminal in December.

Mr Paracha, who is also the company’s CEO, said the licence was issued after his firm’s efforts of more than two years and completion of most legal formalities. “Commercial operations would begin very soon,” he said.

He said under legal process, Ogra would not bar any importer, including UGDC, from buying LNG from the government and sell it to end users at its own price, but importers would require permission from Ogra to export LNG to any party before its entry into terminal.

However, he said the licence was first issued to UGDC under the new rules and third-party access regime introduced under Gas Ordinance and Natural Gas Rules 2002 after approval of Economic Coordination Committee (ECC) of the Cabinet and the Council of Common Interests (CCI).

“UGDC will be exclusively responsible to purchase/arrange LNG and re-gasify at EETPL’s terminal or any other terminal with prior permission of Ogra through finance arranged in accordance with SECP (Securities and Exchange Commission of Pakistan) applicable regulations,” Ogra said.

Under “Standard Conditions”, Ogra added, “SNGPL and SSGCL (working with GTA entities) and terminal operators shall facilitate transport of LNG through pipeline infrastructure, applicable service charges, and fair treatment for the licensee as per applicable rules.”

The UGDC will be required to arrange own finance and will bear all risks and liabilities associated with its business. Ogra said the company would not be entitled to seek any revenue requirements and will have no obligation on the part of the government or its subsidiaries or end users of gas.

Mr Paracha said the success of the UGDC and other similar ventures would reduce gas shortages for the CNG industry to half in Punjab and reduce oil import bill by at least $1 billion per annum besides reducing environmental pollution and saving foreign exchange.

He said hundreds of closed CNG stations in Punjab would be revived within a few weeks of availability of imported LNG. He said gas shortage had severely affected the public transport sector and the general public, especially women and children.

The CNG sector has suffered badly due to a 70pc increase in its input cost as the sale of domestic gas to the CNG sector was already linked with the import parity price and not subsidised like other sectors.

The CNG price had dropped to Rs48 per litre when petroleum prices were around $40 per barrel in 2008, but the government fixed its input gas price at 60pc of petrol price and since then, the prices had gone up by more than 30pc.

He said the new venture would reduce the input cost of the CNG sector and bring the CNG price down to Rs35-40 per litre and would provide a new lease of life to the sector.

For media inquiries, please contact:

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Universal Gas Distribution Company (UGDC) is Pakistan’s first private limited gas distribution company, engaged in the sale, purchase, import, and distribution of gas to commercial and industrial customers nationwide.

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