ISLAMABAD: The Petroleum Division has prepared a summary for the Economic Coordination Committee (ECC) of the Cabinet regarding the Third-Party Access (TPA) to government-contracted unutilized capacity of LNG terminals.
The proposal aims at addressing the issue of unutilized capacity and exploring opportunities for private parties to access and utilize the excess capacity.
Currently, Pakistan has two LNG terminals, namely Engro Elengy Terminal Private Limited (EETPL) and Pakistan Gas Port Consortium Limited (PGPCL). While the capacity of Terminal-1 is fully utilized, Terminal-2 has remaining unutilized capacity. In line with the decision of the ECC in July 2020, the Petroleum Division has initiated efforts to auction the unutilized capacity of Terminal-2 to private parties.
However, previous attempts to auction the unutilized capacity have been unsuccessful, with no or ineligible applications received. The hesitancy of interested companies to engage in the capacity allocation process, along with the impact of high international LNG prices, has been cited as key challenges. To address these issues, the Petroleum Division has engaged with stakeholders and sought input from the World Bank and international consultants.
According to sources, the proposed framework suggests that only industrial consumers and their consortia should be eligible to participate in the auction for the unutilized capacity, ensuring a fair and competitive process. The allocation of capacity would be based on a competitive auction, taking into consideration the government’s socioeconomic agenda, downstream demand, and LNG import plans.
Additionally, amendments to the existing Third Party Access Rules and LNG Policy have been identified to streamline the import of RLNG by industrial consumers for self-consumption. This would enable industrial consumers to have direct access arrangements with transporters without requiring a shipper’s license, reducing reliance on the government for supply and subsidies.
The proposal also addresses concerns about short-term allocation processes and suggests allowing the auction of unutilized capacity for a specified period and quota, as determined by the Petroleum Division. Proportional allocation of capacity would not be applicable under this proposed framework, as it focuses on industrial use based on a competitive selection process.
The summary has been circulated to relevant divisions and ministries, including OGRA, Finance, Planning, Power, and Industries, for their input and comments. The Minister In-Charge for the Petroleum Division has reviewed and authorized the submission of the summary to the ECC.
The proposed Third Party Access to un-utilized LNG terminal capacity in Pakistan aims to optimize resource utilization, encourage private sector participation, and promote a competitive market for LNG. The ECC will review the summary and make a decision in line with the government’s objective of enhancing efficiency and transparency in the energy sector.
