LPG policy draft sent to stakeholders
20 July, 2012
ISLAMABAD: To end cartelisation and promote imports of Liquefied Petroleum Gas (LPG) ostensibly to bridge the energy demand and supply gap, petroleum ministry has sent a draft of new LPG Policy 2012 to the stakeholders seeking their comments.
ISLAMABAD: To end cartelisation and promote imports of Liquefied Petroleum Gas (LPG) ostensibly to bridge the energy demand and supply gap, petroleum ministry has sent a draft of new LPG Policy 2012 to the stakeholders seeking their comments. Official sources told TheNation on the condition of anonymity that Ministry of Petroleum and Natural Resources (MP&NR) in a bid to end cartelisation in LPG market and to promote LPG has sent a draft of LPG (Production & Distribution) Policy 2012 to the stakeholders including gas companies, Oil and Gas Regulatory Authority (Ogra), Ministry of Finance, Planning Commission etc to get their comments on it, adding that stakeholders response in this regard is likely within next week. They said if the stakeholders do not raise any objection on the Policy then it would be put up before the economic coordination committee (ECC) of the cabinet for final approval before its formal enforcement in the country.
They said in order to incentivise the LPG Industry for enhancing local LPG production as well as import of LPG and its utilisation in the automotive sector, the Government is introducing this policy. The main objective of this policy is to address the various issues that could not be covered in the previous LPG policies, to encourage growth of LPG industry for its sustainable and enhanced availability of LPG products. To achieve this objective, issues regarding LPG production, LPG licencing, safety standards, pricing, use of LPG in Automotive sector, import & export have been addressed in this policy. They were of the view that Dr Asim Hussain Advisor to Prime Minister ostensibly remained all-out to promote LPG business at the cost of CNG in the country.
Available draft copy of LPG (Production & Distribution) Policy 2012 disclosed that the market forces would determine the price of LPG in accordance with its demand and supply, however, OGRA would oversee/ monitor that LPG prices should remain within reasonable limit. The Government will charge a Petroleum Levy (PL) from local LPG producers as provided in Petroleum Levy (Petroleum Products) Ordinance, 1961. Further, to ensure that cartels are not formed and charge a high consumer price of LPG, OGRA will determine the quantity of LPG to be imported to meet the gap between demand and supply.About LPG Licencing, the policy draft says that OGRA would issue provisional licences for an initial period of one year, for LPG Marketing to technically and financially sound parties for construction of works commensurate to their work programme subject to providing commitment of LPG supplies from local or international source.
“OGRA will revoke licences of the licence holders who failed to demonstrate firm LPG supply commitment of minimum 10 MT per day, for a period of 3 consecutive years. The work programme will ensure that adequate storage, cylinders and logistics infrastructures are constructed within this timeframe in line with the marketing plan of the company.
On completion of works to the satisfaction of OGRA, the provisional licence will be converted to marketing licence for a period of fifteen years subject to firm LPG supply arrangements and meeting applicable safety rules,” LPG Policy draft says, adding, “OGRA will also issue licences for production/ LPG Air Mix plants, LPG storage and filling plants and LPG refuelling stations for automotives. However, permission from Department of Explosives will also be required wherever applicable under Mineral and Industrial Gases Safety Rules, 2010”. However, the licences shall be cancelled in case of non-compliance with licencing terms and conditions.It is also learnt from the official draft that CNG stations are allowed to setup LPG auto refuelling stations subject to meeting LPG Auto Gas Rules; commitment of LPG supplies from local or international source and inspection of HDIP. The LPG auto-refuelling licencee will be at liberty to purchase LPG from any licenced LPG source.
Regarding import and export of LPG, the draft of LPG policy 2012 has declared that any party can import LPG after paying applicable government dues. However for storage and handling of LPG, a licence will be obtained from OGRA as per their rules while export of surplus quantity of LPG, if available, may be allowed by MPNR, keeping in view the local demand. Policy guidelines pertaining production and disposal of LPG by public sector (Exploration & Production) companies mentioned in the draft policy have further informed that public sector E&P companies shall directly or through other companies exercise their right to set up LPG extraction facilities at gas fields where LPG can be commercially extracted in accordance with the development plan approved by the Government. “E&P companies shall sell their LPG to Sui companies.
In case the Sui companies are unable to lift LPG or surplus availability of LPG with the E&P companies, the same will be supplied to private sector LPG marketing companies on terms and conditions to be settled between the Buyer and Seller,” the draft LPG Policy 2012 reads. Again, to ensure safety throughout the LPG supply chain i.e. LPG storage tanks, cylinders bowzers, and distribution outlets, the licencees will meet the minimum safety standards as laid down in applicable Rules. However, decanting of LPG from cylinder to cylinder is prohibited and cross filling of other LPG marketing companies' cylinder is also prohibited except with the prior approval of OGRA under hospitality arrangement and OGRA shall cancel licences of the LPG marketing companies involved in violation of this section. Similarly, OGRA will amend its rules and regulations as well as licencing terms of its licencees where necessary, to give effect to this policy.
Prescribe codes and standards for conversion of vehicles to LPG and the establishment of LPG re-fuelling stations for the auto sector by LPG Marketing Companies, Oil Marketing Companies and individual CNG stations / Petrol Pumps will be met. Hydrocarbon Development Institute of Pakistan (HDIP) will certify compliance of the above equipment in accordance with international standards. “Rules and procedures in line with the international best practices for regulating the LPG auto sector, and an effective compliance monitoring mechanism will be put in place by the regulator,” the policy draft says, adding, “OGRA will publish a list of authorised manufacturers for all LPG equipment including LPG refueling stations, conversion kits, fuel tanks, cylinders, storage tanks duly approved and certified by HDIP.
However, the equipment manufactured by these authorised manufacturers will be verified and monitored for conformance to the international standards through strict quality control and quality assurance measures by the regulator concerned. It is worth mentioning here that all the LPG marketing companies are supposed to provide certificate(s) duly mentioning the serial number of cylinders, to OGRA before 31st December each year, confirming that all of their cylinders have been thoroughly tested as per requirement of LPG Rules/Standards. Further, it shall be responsibility of LPG marketing companies that their LPG cylinders have been revalidated by HDIP or any other authority concerned, after every five years. Besides, the LPG marketing companies being the licence holder of OGRA would remain responsible for observance of all safety codes and standards at distributors premises as well as for sale price to be notified by marketing companies.