Sindh, Centre lock horns on LNG import

LAHORE: Sindh government has raised objection on the first ever import of Liquefied Natural Gas (LNG) by the federal government, contending that energy is a provincial matter under the 18th Amendment of the Constitution, sources said on Tuesday.
Sources said the provincial authorities want to deliberate issues relating to the use of natural gas in the Council of Common Interest (CCI) before going ahead with the planned import of LNG.
Sindh also wants locally available natural gas to be fully utilised before initiating LNG imports. The province asserts that huge indigenous energy resources, including low British Thermal Unit (BTU) natural gas was available in abundance, which should be utilised first to meet local requirements.
An official claimed that the peak shortfall of two billion cubic feet per day of gas could be bridged by up to 80 percent with utilisation of locally undiscovered / unitised low BTU gas, which is largely available in the province of Sindh.
The province argues that after the 18th Amendment, provinces have the right to explore all energy resources, including import of LNG as per the spirit of article 154 of the constitution.
Official sources confirmed that Sindh government has communicated its concern to the federal government through correspondence.
The government of Sindh has raised its concern at a time when the maiden import of LNG shipment is expected by the end of this month. The process of initiating LNG imports to narrow the gap between burgeoning demand and shrinking supply of gas has been marred by various controversies spanning over the past several years. The crisis of natural gas shortfall started as late as 2008, but no effort could be made by successive governments to reduce its shortage. Now, the present government took measures to import LNG on fast track and removed all bottlenecks.
However, the government of Sindh feels that the whole process has not been duly consulted with the provinces, since natural gas is a provincial subject.
An official told this scribe that the centre is not in agreement with the contention of Sindh province about the import of LNG.
The federal government is of the view that the matter of import as well as shipping is the centre’s business, and hence the present regime was expediting the LNG imports process.
The contending province however has an altogether different view of natural gas utilisation, which is to first exhaust the existing available resources, said an official.
He added that a reasonable tariff of $6-7 per mmbtu for low BTU gas should be announced in order to attract investment, whereas the federal government was only willing to give $3-4 per mmbtu.
But the centre is importing LNG at a much higher rate.
These rates will be in double digits and may vary between $12-16 mmbtu in the coming years.
So, the official said, there is a need to announce around $6-7 per mmbtu rate for local low BTU gas which could be utilised by power, CNG, and other industrial sectors.
It is pertinent to mention here that LNG is being imported primarily for the energy-deficient Punjab, which has been hit the hardest by the energy crisis for last many years. As per government plan, imported LNG will be diverted to the power sector to replace furnace oil and diesel run plants. Some share of the LNG will also be diverted to Punjab based CNG sector.