Trafigura, a Singapore based company, has expressed a desire to help the government out of the gas crisis in Pakistan by supplying LNG, stating it is in a deal with Universal Gas Distribution Company (UGDC) under the third party access rules (TPA). The company wants to rejuvenate the CNG sector and promote new fuel injected CNG kits to improve car mileage.
The company is the 2nd biggest private oil trader in the world plus the biggest private metals trader in the world. In a letter written to the Secretary, Energy (Petroleum Division), the company has asked the government to wrap up the TPA agreement with all the relevant companies on the PGPL terminal operator which will allow Trafigura to supply LNG molecule to UGDC, which will in-turn supply Regassified LNG (RLNG) to the CNG sector.
The letter has highlighted the fact that Pakistan has a shortage of gas due to excessive demand and it has been diverted to the domestic sector – leading to the closure of CNG stations. The company has said that it is in a position to supply gas to the CNG stations and added that they have finalized an arrangement with Universal Gas Distribution Company (UGDCL). They have vowed to deliver LNG DES basis at Port of Ben Qasim, by the start of January 2020.
If the agreement is implemented and Universal Gas Distribution Company (UGDC), along with Trafigura, are allowed to bring an LNG ship and are able to supply the gas to CNG station then the prices of CNG will fall by PKR 6-8 per KG according to an official of the Petroleum Division. This could be beneficial to CNG consumers as well as end monopoly of gas companies – Sui Southern and Sui Northern.
It is important to point out that Omar Ayub Khan, Federal Minister for Energy has already given the approval to allow UGDC to import its first-ever LNG cargo under TPA rules.
Babar Nadeem, Adviser to the PM, has repeatedly guaranteed support to the private sector for entering the LNG supply and distribution market and the price of CNG would fall in Punjab due to this move.
The official added that UGDC is hoping to wrap up the agreement with the Textile Industry for provision of RLNG, but in the first stage the company will supply RLNG to CNG sector.
Currently, there are around 1000 CNG stations in Punjab and this supply of RLNG will push the prices down. In the near future, fuel-injected CNG kits will be introduced for the vehicles which will help boost the fuel efficiency of vehicles and help the consumers save up-to 40-50% in fuel costs as compared with petrol prices.