Home / This Week / Cover Stories / CNG sector moving towards revival on back of LNG interest

CNG sector moving towards revival on back of LNG interest

The Compressed Natural Gas (CNG) sector would be fully revived with increased import of Liquefied Natural Gas (LNG) during the next two years. Around 3,200 CNG stations were operating in 2012 when natural gas supply to the outlets was stopped due to scarcity of the commodity, but now after May 26, 2016 around 2,300 stations have restarted their operations.

A number of private sector investors are taking keen interest in setting up LNG terminals and import of the gas. It is hoped that in next two years Pakistan would have the market of one bcfd (billion cubic feet per day) LNG. Pakistan State Oil is importing 600 mmcfd LNG and its volume would be doubled soon.

CNG stations were operating round-the-clock in a week and getting uninterrupted supply of gas. The association was planning to start import of latest CNG kits and cylinders.

Oil and Gas Regulatory Authority has approved import of lightweight CNG cylinders and latest Electronic Fuel Injection (EFI) compatible kits, which will have eight to ten percent more mileage of vehicles. Arrangement had been finalized to start import of new lightweight 22kg CNG cylinders and compatible kits, which could be used in 660cc to 3000cc vehicles.

Two foreign companies from Italy and Singapore have agreed to provide EFI compatible CNG kits and new lightweight cylinders in Pakistan. The lightweight cylinders would have the same eight kilograms CNG filling capacity as of the old 60 kg CNG cylinders,

The new technology would be easy in handling and useful in fuel consumption, which would give better mileage. It will be cost-effective as compared to the increased prices of vehicles. However, price of new cylinders and kits will be determined after their import. In 2012, Pakistan was on top among CNG-user countries with 3.7 million CNG-run vehicles. Now the emphasis is on inexpensive and environment-friendly fuel, which is almost 30 percent cheaper than the petrol at the existing rates.

Currently, CNG stations are consuming 100 mmcfd gas and it will be increased to 250 mmcfd levels soon. Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) will spend around Rs64.209 billion on upgradation of transmission and distribution network in their respective areas during the current fiscal year.

The gas utility companies have planned to invest Rs12,702 million on transmission projects, Rs43,045 million on distribution projects and Rs8,462 million on other projects, bringing the total investment of Rs64,209 million. Besides, the companies would provide approximately 414,723 new gas connections during the period, while National Assembly Standing Committee on Petroleum and Natural Resources has recently recommended that the two state companies SNGPL and SSGCL would give two million gas connections during the fiscal years 2017-18 and 2018-19.

SNGPL issued 1.5 million new connections since the government came into power in 2013, and hopefully the figure would reach 2.5 million till completion of its tenure. New connection on SSGCL network is granted without any delay and there is almost no such pendency.

 

The import of Liquefied Natural Gas (LNG), the energy situation had improved across the country. This is the cheapest alternative fuel and the only available remedy to meet the country’s energy needs especially when the existing natural gas reserves were depleting.

During July 2016 to February 2017, the sources said, the companies provided 360,465 domestic, 339 commercial and 20 industrial connections across the country. Rs17,925 million on transmission projects, Rs11,183 million on distribution projects and Rs14,925 million were spent on other projects. The companies laid 814 kilometer gas transmission network, 4,153 kilometer distribution and 1,162 kilometer service lines and connected 104 villages and town to gas network.

The sources said around 48 percent energy-mix needs of the country are being met through natural gas, adding that the country had an extensive gas network of over 11,538 kilometer transmission, 1,14,982 kilometer distribution and 31,058 kilometer services gas pipelines to serve more than 7.9 million consumers. Sui Northern Gas Pipelines Limited was committed to provide uninterrupted gas supply to consumers’ round-the-year especially in winter.

Supply of gas had been increased due to import of RLNG and the company had come in a position to meet demand of consumers without any interruption. The Ministry of Energy (Petroleum Division) informed the Senate Standing Committee on Finance and Revenue that the federal cabinet had given approval to the recovery of Gas Infrastructure Development Cess (GIDC) worth billions of rupees from the CNG sector. The GIDC is being collected from the consumers of various categories, except residential ones, for more than five years with the sole objective of arranging funds for gas pipeline infrastructure to facilitate utilization of imported gas.

The government had given undertakings to parliament that GIDC would be used to spread gas pipeline network. The official of the ministry informed the committee that the federal cabinet had approved it on 3 January 2018. Regarding the GIDC Amendment Bill, 2017, the official informed the committee that that soon it will be tabled in parliament for approval. On the approval of bill from the parliament, Rs12 billion would be recovered from the CNG sector in two installments.

CNG stations have been collecting Cess on CNG sale price in accordance with the notification issued by Oil and Gas Regulatory Authority (Ogra) but a significant portion of the amount was not deposited to SNGPL and SSGCL for its onward payment to the federal government due to various courts’ stay/restraining orders. The association was planning to import lightweight 22kg CNG cylinders and compatible kits to help improve efficiency of the gas-run vehicles.

Samples are arriving from European countries and South America, which will be submitted to technical experts of OGRA for evaluation and getting approval for import of the CNG cylinders and kits. Price of the lightweight environment-friendly CNG cylinders and supporting kits would be determined after passing of the samples, following which new technology will be available in the Pakistani markets in next three to four months. A number of international entrepreneurs were contacting APCNGA and showing keen interest to invest after seeing potential in CNG sector of Pakistan.

Check Also

Chances for future success of steel, cement sector under CPEC projects

Chances for future success of steel, cement sector under CPEC projects

There are hopes being pinned for high growth of cement and steel industry after the …

Leave a Reply