The Oil and Gas Regulatory Authority (Ogra) has asked the government to immediately create a National Gas Transmission Company (NGTC) classified as a “strategic asset” to begin with gas sector reforms and open up the gas market for competition and facilitate bridging a massive demand-supply gap currently facing the country.

Govt asked to begin gas reforms, set up transmission firm

According to Ogra estimates, Pakistan’s unrestricted gas demand is currently more than six billion cubic feet per day (bcfd), compared to 3bcfd of total supplies, including imported LNG, leaving a growing shortfall of more than 3bcfd. In a presentation, Ogra’s member gas Muhammad Arif has pointed out a series of gas market challenges, including resistance from gas utilities to reforms for fear of losing market share; limited domestic gas reserves and production, no gas storage facilities; and limited LNG handling facilities both in terms of terminals and pipelines. Some other issues also included the country’s perceived investment risk, overall economic conditions, and zero private sector participation in midstream and downstream. The Ogra member has highlighted that optimum capacity utilisation of infrastructure was an important element of gas sector reforms and a third party access (TPA)l regime was already in place for the gas pipeline network, but “Sui companies’ fear of losing customers is a bottleneck.”

Given the limited availability of gas, the government has been advised to revisit gas supply priorities and formulate a policy for the allocation of gas upstream to create an enabling environment for multiple players. On its part, the Ogra is in the process of finalising TPA for LNG terminal and storage facilities for which the government would have to introduce special fiscal incentives to red carpet fresh investment instead of creating barricades. According to the Ogra member, the exclusivity of two gas utilities in their franchised areas has ended, and “implementation has started to pay the way for private participation in transmission and distribution networks.” The Ogra has also sought the federal government’s policy guidelines regarding the extension of transmission and distribution networks in new towns and villages despite fast-increasing gas shortfalls amid declining domestic gas production and unaffordable international prices.

Source: This news is originally published by dawn

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