Economic Coordination Committee (ECC) of the Cabinet is likely to approve new Liquefied Petroleum Gas (LPG) Policy 2012 on Tuesday (today) according to which a ban will be imposed on the sale of gas to the private sector by the public sector, sources close to the Petroleum Secretary told Business Recorder.
“To ensure that cartels are not formed and high consumer price of LPG is not charged, Petroleum Ministry and Ogra will determine the quantity of LPG to be imported to meet the gap between demand and supply,” the sources added.
The ECC, in its meeting on August 23, 2011 approved Production and Distribution, 2011 but before the policy could realise its objective and give some fruitful results, some of the marketing companies filed a writ petition in Lahore High Court (LHC) whereby the operation of the policy was suspended. The matter is subjudice.
The Petroleum Ministry argues that in view of the increasing energy demand especially gas, it is essential to enhance its availability in the country. The current production of natural gas from indigenous sources is around 4 BCFD whereas its demand exceeds 6 BCFD.
Under these circumstances there is a dire need for diversification to other sources including LPG so that heavy dependence on natural gas can be minimised.
Accordingly, in order to encourage use of LPG in LPG air mix plants and in auto sector, Ministry of Petroleum has drafted LPG Production and Distribution Policy 2012, with the a view to addressing various issues that could not be covered in the previous LPG policies to encourage growth of LPG industry for sustainable and enhanced availability of LPG products.
The sources said the objectives of the LPG Production and Distribution Policy 2012 are to incentivise the LPG industry for enhancing local LPG production as well as import of LPG and its utilisation in the automotive sector and in LPG air mix plants for provision of gas to consumers.
To achieve these objectives, various issues regarding LPG production, licencing, safety standards, pricing, use of LPG in auto sector, provision of air mix LPG to reduce pressure on existing gas system, import and export have been addressed in the revised policy.
The salient features of the LPG Production and Distribution Policy 2012 are as under: (i) the requirement of prior long-term arrangements for availability of LPG has been dispensed with; (ii) producers who fail to set up LPG extraction plants within the stipulated time as given in the development plan will forfeit their right of extraction in favour of government; (iii) public sector producers will sell their LPG to Sui Companies for use in LPG air mix plant; (iv) international safety standard “NFPA-58” or equivalent have been introduced for storage, cylinder, bowzers and distribution outlets. Compliance monitoring system will be put in place through regular and HDIP or other third party authorised inspectors would conduct inspections; (v) price of LPG supply chain would remain deregulated; (vi) to ensure that cartels are not formed and high consumer price of LPG is not charged, Ministry of Petroleum and Ogra will determine the quantity of LPG to be imported to meet the gap between demand and supply; and (vii) the government will use petroleum levy fund to subsidise LPG prices to provide benefit to the public.
The LPG Production & Distribution Policy 2012 is expected to increase the supplies of LPG, its share in the country’s energy mix, help in reaching far-flung areas of the country in provision of energy in the form of LPG air mix, enforcing stringent safety measures by adoption of international standards, prohibition of illegal activities i.e. cross filling and decanting, encouraging healthy competitive environment under a complete price deregulation regime, encouraging investment in infrastructure and development of LPG auto gas sector in the country, the sources concluded.