Ban imposed on setting up of new CNG stations

[Naveed Yaseen]

MUSHTAQ GHUMMAN
ISLAMABAD (December 13 2008): In a major policy decision, the government has slapped a ban for indefinite period on the establishment of new compressed natural gas (CNG) stations, with immediate effect, due to gas shortage in the country, sources in Petroleum Ministry told Business Recorder.

This decision was taken by the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on December 2, 2008, but it had been kept secret because of likely sharp reaction from investors who had already invested to set up new CNG stations, sources added.

The ECC also decided to divide industrial clusters/estates, including textile sector, into zones for gas disconnection in a rotational manner. Sources said that weekly holidays will be rotated by industrial clusters, estates, whereas industrial units have also been asked to arrange timely alternative fuel for winter months to avoid closure.

According to sources, Lahore Chamber of Commerce and Industry will arrange immediate energy audit of member industrial units for efficient gas units. Specific gas earmarked for Gadoon Industrial Estate will be managed locally by its management.

The ECC also approved natural gas management plan program for winter 2008-09, according to which additional quantity of 150 mmcfd gas has been allocated to the Water and Power Development Authority (Wapda), and 64 mmcfd to industrial sector, with a guarantee of supply by the Petroleum Ministry.

According to sector-wise approved gas curtailment program, cement sector's gas will be slashed by 60 mmcfd in December, January and February, whereas power sector will be deprived of 360 mmcfd gas during winter.

Fertiliser sector's (30 days Annual Turned Around) gas will be cut by 10 mmcfd gas in December, 91 mmcfd in January and 24 mmcfd in February, while general industry and captive power will be disadvantaged of 317 mmcfd gas in December, 352 mmcfd in January and 281 mmcfd in February. Sources said that total natural gas curtailment will be 707 mmcfd in January, 823 mmcfd in January and 685 mmcfd in February.

The proposed gas load management implementation program is as follows: a) domestic and commercial sector would continue to get gas supply even during weak winter months; (b) three fertiliser plants on SNGPL system will go for annual ATA of 30 days each ie Pak-Arab from December 26, 2008 to January 24, 2009, Dawood Hercules from January 1, 2009 to January 30, 2009, and Pak American January 25, 2009 to February 23, 2009; © for start-up purposes, SNGPL will supply up to 30 mmcfd gas to the Wapda's following power plants ie Faisalabad Thermal Power Plant(FTPP) 15 mmcfd, Faisalabad Gas Power Station(FGPS) 5 mmcfd and Mauzaffargarh 5 mmcfd.

Sources said that 80 mmcfd gas supply will continue to Guddu, direct from the fields. In addition, 85 mmcfd to Rousch, 19 mmcfd to FKPCL and 50 mmcfd to Liberty Power who have 12 months supply contract will also continue.

Forty-one glass units on SNGPL system will be supplied/curtailed gas as per the following strategy; i) Supply to 10 units will be disconnected and will be supplied on as and when available, (ii) supply to 22 small scale units with negligible load will continue, (iii) for 9 major units, best efforts will be employed to meet 50 percent of their demand.

The Ministry of Petroleum in its summary had proposed disconnection of gas supply to CNG stations, or at least to deprive them of 100 mmcfd gas in winter, aimed at improving supply to households and power stations.

The ECC was of the view that the proposal of shutting down gas supply to CNG stations or curtailment of their supply would create resentment among the general public. However, it was unanimously approved that a ban should be imposed on new CNG stations.

Petroleum Ministry, as part of its natural gas load management program for winter 2008-09, will supply 58 percent less gas in winter to power sector, whereas gas supply to cement sector will be zero, sources said.

The ECC in its meeting on October 12, 2008 had constituted a committee, under the chairmanship of Special Assistant to Prime Minister on Finance and Economic Affairs (now Minister of State for Finance), Hina Rabbani Khar, and In charge Petroleum Minister Shah Mahmood Qureshi and Industries Minister Manzoor Wattoo as members.

The Ministry argued that since there is no Gas Sale Agreement (GSA) between Pakistan Electric Power Company (Pepco) and Sui Northern Gas Pipeline (SNGPL), and gas was being supplied to Pepco on 'as and when available' basis but the contents of the proposal did not attract the ECC members, especially the chairman of the committee, sources added.

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