Govt unveils gas sector overhaul to spur investment – Pakistan

ISLAMABAD: The government on Thursday offered another amnesty to powerful industrialists and opened the LNG sector from much of the government control with which it is currently impregnated. In addition, it has also been decided to reduce the number of laws, regulations and approvals related to the energy sector and offer better incentives to investors to improve the country's ranking in the Ease of doing business index and revive investor confidence.

The Minister of Energy, Omar Ayub Khan, and the Special Assistant to the Prime Minister on Petroleum, Nadeem Babar, announced at a press conference on Thursday that the government had enacted a presidential ordinance for the extrajudicial settlement of a dispute of Rs417 billion with the industry on Gas Cess for Infrastructure Development. (GIDC).

He said five international companies – Shell, ExxonMobil, Mitsubishi, Trafigura and a French firm – have been authorized by the government to establish a terminal for the processing of imported liquefied natural gas (LNG) without any government permission or participation. There will no longer be sovereign guarantees extended to these projects, or capacity charges, or purchase commitments. Instead, the terminal operators will only need the allocation of the site by the port authorities, and will import LNG and supply it to their own private clients.

The ordinance allowed the industry, the fertilizer sector and the CNG sector to pay half of their outstanding GIDC bills within 90 days in advance and obtain a 50 percent discount on future invoices provided they withdraw their court cases. Babar said the government expected around Rs 200,000 million, depending on the willingness of consumers, to take advantage of the amnesty plan, otherwise they would make full payments after adjudication of their court cases. "We believe they will lose cases because GIDC had imposed itself through legal instruments that the courts must defend," he said during the press event.

Five global companies authorized for the next LNG terminal; offer offered to the industry for overdue payments from GIDC

Omar Ayub said the government had decided to facilitate industrialists, investors and ordinary citizens through the simplification of procedures and processes to get rid of bureaucracy and "an obsolete culture." He said that in a few days many measures aimed at facilitating business would be announced.

Nadeem Babar said that the oil division had been working for weeks on the directives of the prime minister to develop policy reforms and simplification of procedures and it was observed during consultations that many laws and regulations had become obsolete or were not useful in this regard. day and age and only added obstacles to business.

He said that most policy reforms would go through several stages and approval forums and that it could take a couple of months to amend and repeal laws and regulations as the case may be. Attempts have been made to open all sectors, attract new people and investors and put an end to existing monopolies, whether in the public or private sector. The idea would be to provide the best services at the lowest cost and achieve efficiencies at all levels.

In the exploration and production sector, he said that exploration companies required 24 to 30 approvals over a period of 3-4 years to start business. As a result, many of the leading international firms that had left Pakistan were now being persuaded to return by reducing these approvals by a minimum of 10 and ensuring that the remaining approvals do not take more than 18 months. He said that some 27 new exploration blocks would be offered for open bidding in two or three phases as of December this year and that several companies from Canada, the United States, the United Arab Emirates and other places were expected to participate.

Many of the existing gas fields have become unattractive from a commercial point of view because they are small, far from the pipe network or in decline mode. Therefore, the government has decided to offer higher rates in these fields as incentives. He said the government hoped to curb the growing dependence on imported LNG as a result.

In the refining and marketing sector, SAPM said that companies required between 17 and 25 approvals at present to start a gasoline pump. A detailed review showed that only 6-7 approvals were necessary for the public interest, such as those related to the environment, protection against explosives and the necessary regulatory authorization.

Similarly, 14-19 approvals were currently required for oil storage under the obsolete legal agreement that would also be reduced to a maximum of 5-6. In addition, existing old refineries would receive exemption from income tax and customs duties for 10 years if they upgrade their facilities to a deep conversion, while new refineries will also receive an attractive facilitation.

In the gas sector, Babar said the government has ordered gas companies to ensure that once generated monthly bills reach consumers within 48 hours, they should have a payment term of 15 days. Second, gas companies would be required to automate their system and provide a mobile application to allow complaints to be recorded and monitored live.

In addition, the gas connection for industrial consumers would be guaranteed within 30 days and the connection request and its progress will be available on a web portal.

He said that all operators in the country's gas fields should produce liquefied petroleum gas from all fields and that government companies such as OGDCL and PPL will hold an open auction for sale.

Posted on Dawn, August 30, 2019



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