ISLAMABAD: The government has geared up to install capital intensive LPG air mix plants valuing Rs514 million apparently to provide the gas to the consumers in some parts of the hilly areas instead of enhancing the supply of LPG to the consumers through cylinders which is cheaper mode to supply fuel.
On top of that, the burden of the cost of the LPG air mix plants that include cost of LPG storage facility, installation and commissioning, civil works, land and gas distribution network will be recovered from gas consumers in the form of weighted average cost of gas (WACG).
The summary has been prepared by Ministry of Petroleum and Natural Resources signed by its secretary Arshad Mirza and now has been pitched in the Economic Coordination Committee (ECC) that met here on Monday with Finance Minister Ishaq Dar in the chair.
As per the summary, LPG Air Mix plants will be set up with the assistance of gas utilities in Murree, Gilgit, other hilly areas in the north and Azad Jammu and Kashmir (AJK). However, independent officials say the laying of natural gas distribution network is not considered economically feasible in the hilly area.
Ogra has also opposed the proposed initiative of the ministry arguing LPG Air Mix plants are capital intensive and the cost of the project along with construction of LPG storages and gas pipe network should not be passed on the gas consumers of the country.
The ECC on Monday considered the proposal of Ministry of Petroleum and Natural Resources on LPG Air Mixture Projects and decided that in view of CCI approval accorded on February 29 regarding LPG Policy 2016, any further approval from ECC was not required in the matter. Now it was up to Ogra to implement the approved Policy in letter and spirit.
Some officials say in the countries like Saudi Arabia, UAE and Kuwait, LPG cylinders are used and the said oil economies do not prefer installing LPG Air Mix Plants as they all consider them the capital intensive. But the government is adamant to establish the costly LPG Air Mix plants.
However, the summary of which the copy is available with The News mentions that the board of directors of Sui Northern Gas Pipelines Limited (SNGPL) had already accorded approval for installing 20 LPG air-mix plants in these areas in a meeting held on June 12, 2014.
The summary prepared for ECC also mentions that comprehensive site surveys have been conducted to select potential points for the establishment of air-mix plants. Initially, three suitable locations have been identified in Murree.
The three sites identified in Murree are Kur Bagla Dewal,Tret and Company Bagh, for which SNGPL has invited tenders according to rules of the Public Procurement Regulatory Authority (PPRA).
Federal Minister for Petroleum and Natural Resources Shahid Khan Abbasi told The News that establishing the LPG Air Mix pants in hilly areas and some parts of Balochistan is not capital intensive as the Air Mix gas is of low pressure and the high cost pipes are not required to provide the said gas to the consumers. Instead, low cost pipes are needed which is why the issue of nature of capital intensiveness gets neutralized, he said.
The minister said ECC in its Monday’s meeting has mentioned that CCI is a supreme forum which has already given the green signal to the said proposal so it does not require the approval of ECC.
He said that cost of the gas from LPG Air Mix plants will be equal to the price of highest slab of domestic consumers which are still subsidised meaning by that the consumers residing in hilly areas of Murree, Gilgit and AJK and far flung areas of Balchostan wherein gas network is not available will also be getting the subsidised gas like the domestic consumers of the area wherein gas pipeline networks are available.
When asked if the cost of the projects will be passed on to the gas consumers across the country, the minister said: “Yes it will be reflected in the tariff in the form of weighted average cost of gas and the impact of three projects has been worked out at just 32 pasias per unit which is negligible.”
He said one LPG Air Mix plan will cater to the gas requirement of population of 3000-4000 houses. He said that in hilly area, massive deforestation is taking place because of which land sliding and flood hitting in the hilly areas has started occurring frequently endangering the existence in both the wild and human lives. “Using of gas through LPG Air Mix plants will help save the environment and beauty of the area as well.”
The minister explained while dwelling on the usage of LPG cylinder that the cost of cylinder filled with LPG will be higher than the gas to be provided through the new initiative arguing gas through LPG Air Mix plants will be subsidised.
