Is Dying CNG Sector Finally Going to Revive?

It took over a decade for Pakistan to realize the need for new CNG supply avenues, but finally, the Economic Coordination Committee (ECC) gave permission today.

Here is a quick recap of all that has happened in the CNG/LNG nook of the economy.

As the private sector is already expanding its share in the import sector for liquefied natural gas (LNG), the Economic Coordination Committee (ECC), in its meeting scheduled for October 7 (today), has granted licenses for new compressed natural gas (CNG) filling station based on LNG supply.

The government had already permitted the private sector the import of LNG in a bid to utilize the full capacity of the second LNG terminal, which has remained underutilized in the past couple of years due to power producers’ reluctance to purchase and consume imported gas.

Now, with these new licenses issued, the full capacity of the terminal will be utilized, resulting in a lower tolling fee for the consumers.

The decision to issue these licenses came after years-long debate and one ban on these licenses dating as back as 2008. On January 6, 2008, the then caretaker prime minister – upon receiving a presentation on the power and gas situation in the country – directed the CNG licenses to be held up and not be issued to anyone not already possessing such a license.

Later, in April 2011, the then prime minister issued a moratorium on the issuance of commercial and industrial gas connections across the country. By September the same year, certain relaxations had been made and OGRA issued marketing licenses to a handful of companies under certain conditions.


New CNG Stations to be Allowed to Sell RLNG Now

The summary of the decisions taken at that time may be explained in these words: The ban on new provisional licenses were kept but the prospective clients who had already almost completed the civil work and were finished with the installation of the equipment were granted marketing licenses.

Eventually, in 2017, the federal cabinet relaxed the moratorium based on RLNG which enabled the prospective gas utility companies to provide new connections. Since then, the private sector has also been allowed to enter the gas distribution and marketing channels, thereby creating room and need for such CNG licenses to be issued once again.

Under the purview of these developments, a summary was prepared by the Petroleum Division and sent to the cabinet, while seeking comments from the ministries of Finance, Planning, and Industries & Production.

Today, the ECC has allowed OGRA to issue new CNG Licenses to RLNG based CNG stations with the provision that the Licensee will neither receive indigenous gas nor can claim for its conversion to indigenous gas.

As a result of the approval for new licenses, the government can save approximately Rs. 100 billion over the next 12 years by handling 150 million cubic feet per day (mmcfd) of additional LNG at the second LNG terminal.

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