Liquefied natural gas (LNG) policy, 2011.Pakistan's policy for the sustainable development Sustainable development is a socio-ecological process characterized by the fulfilment of human needs while maintaining the quality of the natural environment indefinitely. The linkage between environment and development was globally recognized in 1980, when the International Union of the energy sector, including the provision of reliable and competitively-priced energy is based on the following objectives:
(a) Optimization of the primary energy mix, based on economic and strategic considerations;
(b) Maximizing the utilization of indigenous energy resources;
(c) Enhancing private sector participation in the energy sector by strengthening the regulatory framework and institutional capacity;
(d) Developing energy infrastructure; and
(e) Developing human resources with emphasis on energy sector-specific technical skills and expertise
Natural gas plays a key role in Pakistan's energy balance which is currently around 50% of the country's primary energy supplies. With accelerating economic growth, the demand for gas is projected to increase sharply and the country's recoverable indigenous gas reserves will be insufficient to meet this demand. Gas shortages have already emerged and shall increase substantially in the following years if indigenous supply is not supplemented through imports. In order to address the shortage, strong emphasis is being laid on importing gas from neighbouring gas-producing countries through cross-border gas pipelines and also in the form of liquefied natural gas liquefied natural gas: see under natural gas.
Liquefied natural gas (LNG)
A product of natural gas which consists primarily of methane. Its properties are those of liquid methane, slightly modified by minor constituents. ("LNG LNG (liquefied natural gas): see under natural gas. "). Necessary measures are being taken for installation of LNG receiving, storage, re-gasification facilities and expansion of gas transmission infrastructure, for the distribution and sale of regasified LNG ("RLNG") in the domestic market.
The LNG Policy 2006 has been modified to facilitate expeditious ex·pe·di·tious
Acting or done with speed and efficiency. See Synonyms at fast1.
ex implementation of the LNG Projects.
LNG Import Project Structure
An LNG import project may be structured under one of the following alternatives: (a) Integrated project structure, under which a private or public sector party, joint venture or consortium (hereinafter referred to as "LNG Developer") is responsible for purchasing LNG supplies, transporting them to its LNG import terminal (comprising of receiving, storage and re-gasification facilities) and supplying RLNG to the domestic market and/or for its own use. The LNG Developer would enter into a Gas Sales and Purchase Agreement (GSPA GSPA Generic Signal Processor Architecture ) directly with a Government-designated buyer, gas utility or any customers (hereinafter referred to as "RLNG Buyer(s)"); or
(b) Unbundled project structure, under which: i. A Government designated buyer, gas utility, any consumer or any LNG supplier (hereinafter referred to as "LNG Buyer(s) would directly import the LNG under a LNG Sale and Purchase Agreement ("SPA") either on a delivered ex ship (DES) basis, or a free-on-board (FOB FOB 1) adj. short for Free on Board, meaning shipped to a specific place without cost. 2) Friend of Bill (Clinton). (See: Free on Board) ) basis, or C&F basis.
ii. For FOB purchase, the LNG Buyer would in addition, enter into an agreement with a shipping company to transport LNG to the receiving terminal.
iii. The LNG Buyer(s) would enter into an agreement with the LNG Terminal Owner and/or Operator (hereinafter referred to as the "LNG TO/O") for the provision of LNG receiving, storage and re-gasification services at its terminal under a tolling agreement.
An LNG Developer or LNG Buyer as the case may be, will be allowed to import LNG in accordance with applicable import laws, rules and regulation. While issuing license to an LNG Developer or RLNG Seller, the Oil and Gas Regulatory Authority (OGRA OGRA Oil & Gas Regulatory Authority (Pakistan)
OGRA Ontario Good Roads Association (Canada) will take into account Government policy guidelines and will adopt following criteria to ensure sustainability of LNG chain:
(a) For the LNG Developer, at least one member of the consortium will be required to have technical and commercial experience along the LNG supply chain.
(b) LNG Developer or LNG Buyer /RLNG Seller will provide evidence of sufficient purchase commitment (in the form of a HOA) from end users for a minimum volume of RLNG sufficient to support the terminal investment and the potential for further sales, if necessary, in order to cover the full contractual LNG purchase commitment.
(c) Notwithstanding the above, LNG imports can also be made on spot purchases based on market and commercial considerations.
(d) For avoidance of any doubt, it is stated that a licence will not be required for import of LNG by LNG Developer and LNG Buyer, as the case may be. Procurement of LNG by the LNG Buyer(s) will be undertaken through one of the following approaches:
(a) Direct negotiations with one or more LNG suppliers for supply of LNG for a reasonable time to be determined by OGRA; or
(b) International competitive bidding for the supply of LNG for a reasonable time to be determined by OGRA; or
(c) Direct purchase from the LNG spot market based on market and commercial considerations on a competitive basis, excluding supply to public sector gas utilities.
If procurement of LNG is undertaken by a public sector entity, the Government may authorize the entity to adopt the direct negotiation approach with a group of LNG suppliers if the demand-supply dynamics of LNG require this approach to be adopted.
Construction period: At the construction stage, OGRA will ensure that the following parameters are included in the license to be issued to the LNG Developer or LNG TO/O, as the case may be, and the licensee comply with the same:
(a) Technical parameters: The terminal complies with internationally recognized and proven standards for LNG installations prescribed by OGRA from time to time including those specified in Appendix-1.
(b) HSE HSE House
HSE Health and Safety Executive
HSE Helsinki School of Economics
HSE Hamilton Southeastern (High School)
HSE Health, Safety & Environment
HSE Higher School of Economics (Moscow, Russia) standards: The project meets the HSE standards specified in the license.
(c) Other permits and approvals: Permits and licenses from Government departments such as Ministry of Defence, Port Authorities, Environmental Protection Agency, Chief Inspector of Explosives and provincial and local government agencies have been obtained. Operating period: During the operating period, OGRA will regulate the following:
(a) Access rights: All LNG terminals and associated facilities will be operated on a system of regulated third party access ("RTPA RTPA Recombinant Tissue Plasminogen Activator
RTPA Regional Transportation Planning Agency
RTPA Real Time Process Algebra (software architecture)
RTPA Rádio Televisão Portuguesa Açores (Portuguese TV Channel) ") based on published / negotiated tolling tariffs in an objective competitive environment without discrimination excluding however tolling tariff for public sector shall require OGRA's approval. Exceptions from such regulation will be given to those LNG terminals and associated facilities that are developed for own or dedicated use. Access to such terminals will be based on negotiated third party access ("NTPA NTPA National Tractor Pull Association
NTPA New Trades Processing Architecture
NTPA Naval Technical Proficiency Assist "). RTPA and NTPA will be administered by OGRA through a clear regulatory mechanism. It is clarified that the LNG Developer will have priority access to its own LNG terminal capacity provided it has firm capacity utilization plan for own or dedicated use for a minimum period of 10 years.
(b) Terminal tariff and returns: In case of sale to public sector gas utility OGRA will approve tolling tariff negotiated between the utility companies and LNG TO/O on the basis of following components:
i. Capacity or fixed element covering capacity reservation and other fixed charges;
ii. Variable elements covering the variable operation and maintenance charges of the LNG terminal.
iii. Utilization of capacity.
(c) In order to ensure that the capacity of an LNG terminal is optimally utilized, OGRA will adopt and implement the mechanism of "Use-it-or-lose-it". (d) Reporting requirements: The LNG Developer or LNG TO/O, as the case may be, will have to publish capacity utilization rates and tariffs as approved by OGRA and at such regular intervals as may be determined by OGRA. Storage Facility: Gas storage facility may be developed by the LNG Developer/LNG TO/O. Gas Storage may be allowed at a tariff determined by OGRA. Gas Pricing:
(a) For RLNG supply to SSGC SSGC Sui Southern Gas Company (Pakistan)
SSGC Société Suisse du Génie Chimique
SSGC Scandinavian Strategic(al) Gaming Community and SNGPL SNGPL Sui Northern Gas Pipelines Limited (Pakistan) ; the RLNG price will be an input for determining the weighted average cost of gas in Pakistan, determined by OGRA, for GoP specified consumers and industry.
(b) The LNG Developer/LNG Buyer will have the right to sell RLNG to end users directly based on a negotiated price. SSGCL/SNGPL will not sell gas priced under 6.3 (a) to industries which are selected by GoP to use RLNG from time to time.
OGRA will ensure that subject to capacity being available, the LNG Developer or LNG Seller or RLNG Buyer, as the case may be, will have access to the SSGC and SNGPL pipeline network or any other new entity at a transportation tariff to be determined under Third Party Access (TPA (Transient Program Area) See transient area.
TPA - Transient Program Area ) Rules even after privatization privatization: see nationalization.
Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned of these two entities. If SSGC/SNGPL do not have available capacity, the LNG Developer or LNG Buyer or RLNG Buyer, as the case may be, can request SSGC/SNGPL or any other operator of pipeline to expand capacity based on technical and economical considerations or may construct its own pipeline subject to grant of license by OGRA. In determining available capacity, OGRA would consider the capacity that could be made available by swapping gas between SSGC and SNGPL systems.
The quality of RLNG which is to be injected into the transmission and distribution network of the gas companies shall be compatible with the quality of gas in such system and which shall be reviewed by the Gas Companies according to OGRA's notified gas specifications.
(a) The blending/dilution of RLNG to meet the quality required shall be the responsibility of the LNG Developer/LNG Seller.
The following fiscal incentives will be granted to the LNG Developer, LNG TO/O or LNG Buyer as applicable:
(a) Zero percent customs duty will be charged on imported LNG. LNG Buyer or LNG Developer importing LNG will also be exempted from withholding tax The amount legally deducted from an employee's wages or salary by the employer, who uses it to prepay the charges imposed by the government on the employee's yearly earnings. at import stage in respect of such import. FBR FBR Friedman, Billings, Ramsey Group, Inc. (investment firm)
FBR Fast Breeder Reactor
FBR Federal Benefit Rate
FBR Foundation for Biomedical Research
FBR Foundation for Blood Research
FBR Fluidized Bed Reactor will issue necessary notification in this regard.
(b) Exemption from custom duty in excess of 5% with total exemption from sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. in respect of plant, equipment and machinery, not locally manufactured, imported by that LNG Developer or LNG TO/O, as the case may be, by expanding the scope of SRO See Self-regulatory organization.
See self-regulatory organization (SRO). 678(l)/2004, dated 7/08/2004. Import of such plant, machinery and equipment and parts will also be exempted from withholding tax at import stage as allowed under clause 56(vii) of the part (vi) of the second schedule to the Income Tax Ordinance, 2001;
(c) Initial Allowance will be admissible at the rate of 50% of the cost of depreciable depreciable
Of, relating to, or being a long-term tangible asset that is subject to depreciation. assets under section 23 of the Income Tax Ordinance, 2001. In addition, normal deprecation dep·re·cate
tr.v. de·pre·cat·ed, de·pre·cat·ing, de·pre·cates
1. To express disapproval of; deplore.
2. To belittle; depreciate. at the rate of 10% will be also allowed on plant and machinery.
(d) Exemption from withholding tax on interest payments to foreign lenders will be allowed as permissible under various provisions of the Income Tax Ordinance, 2001.
(e) Sales tax and Federal excise duty will be charged on import and supply of LNG at applicable rates.
When an LNG Developer or LNG TO/O, as the case may be, has identified a suitable site (whether land based or offshore), the Government will actively assist the LNG Developer or LNG TO/O, as the case may be, in obtaining land and port facilities for an LNG terminal at a reasonable cost and within a reasonable time frame.
The Government will encourage the participation of multi-lateral development banks (MDBs) in LNG import projects to facilitate the financing of such projects inter alia [Latin, Among other things.] A phrase used in Pleading to designate that a particular statute set out therein is only a part of the statute that is relevant to the facts of the lawsuit and not the entire statute. through equity participation by MDBs and MDB (Message-Driven Bean) An Enterprise JavaBean (EJB) generated by the Java Messaging Service. See EJB. instruments such as political risk guarantees and partial credit guarantees.
A Task Force headed by the Secretary, Petroleum and Natural Resources and comprising Additional Secretary of Finance, Defence, Industries, Ports and Shipping Divisions, a representative of OGRA, Member (Customs)-FBR, Chairman of the concerned seaport authority, Director Generals of the concerned EPA EPA eicosapentaenoic acid.
n.pr See acid, eicosapentaenoic.
n. , Coast Guards and Maritime Security Agency and Commander Karachi or COMCOAST Gawadar, to facilitate the implementation of LNG import Projects, as notified under LNG Policy, 2006, will remain intact. This Task Force will act as a "one-stop-shop" to address all issues concerning LNG import projects, including the interpretation of policies and regulations. Pricing of RLNG
With an integrated or an unbundled approach, RLNG will be procured by gas utilities/RLNG Buyer(s) in the public/Private sector for Medium / LongTerm from a LNG Developer or RLNG Seller who offers the lowest price at a designated point of delivery. This price will be the input price to the weighted average cost of gas in Pakistan as per para 6.3(a) above.
In case LNG/RLNG is procured by the public sector, the price of RLNG will be determined by the OGRA at the terminal flange flange (flanj) a projecting border or edge; in dentistry, that part of the denture base which extends from around the embedded teeth to the border of the denture.
1. based on (i) the LNG purchase price; (ii) the direct and indirect costs of transportation, storage, and re-gasification incurred by the LNG Developer/TO/O, and (iii) a reasonable return on the investment made by the LNG Developer/TO/O.
RLNG can also be procured by private sector, by public sector or in public-private partnership based on lowest price demonstrable to the regulator.
The Government shall not provide any guarantee for LNG import projects. However, Government support may be considered, if needed, to secure long term, LNG supplies to Pakistan.
Freedom to Participate in the LNG Business
All interested parties who meet the criteria provided herein will be free to participate in any segment of the LNG value chain.
Technical Codes and Standards
The design, construction and operation of the LNG import project facilities will comply with internationally recognized and proven codes and standards for LNG installations including those specified in Appendix-1.
No second-hand or refurbished LNG plant, equipment, machinery or part thereof will be installed at the LNG terminal or at associated facilities. In case of offshore LNG terminals, used LNG ships utilized for either conversion into a floating LNG terminal or for storage of LNG in association with an offshore LNG terminal will be allowed by OGRA as long as the vessels maintain their classification status certified by one of the IACS IACS Integrated Administration and Control System (EU system to administer payments under the common agricultural policy)
IACS International Association of Classification Societies
IACS Indian Association for the Cultivation of Science member classification societies as approved by Director General Port and Shipping and hold all valid class and flag state statutory certificates.
OGRA will issue a license for an LNG terminal based on a suitable, tested and proven internationally acceptable technology for the design, construction, and operation of the LNG terminal and associated facilities.
Following receipt of a complete application, covering all relevant aspects of the proposed LNG project including a comprehensive feasibility study undertaken by a project proponent through a consultant of international repute, OGRA will undertake a full review and audit of the proposed project at the cost of the project proponent (including the cost related to outsourcing of the expertise, if necessary) and take a decision regarding issuance of a license or rejection of the application within 90 days.
All LNG ships entering Pakistan's maritime zones shall comply with International Maritime Organization's regulations.
Shipping of LNG
All LNG ships transporting LNG to Pakistan will have to be registered with an acceptable international classification society. Other Permits and Licenses The LNG Developer, LNG TO/O, LNG Buyer or RLNG Seller will have to obtain permits and licenses from Government departments such as Ministry of Defence, Naval Headquarters, Port Authorities, Environmental Protection Agency, Chief Inspector of Explosives, and provincial and local government agencies, as per applicable laws, rules and regulations. Other Measures
In order to facilitate early start of an LNG import project, OGRA will take a decision regarding issuance of a license or rejection of the application under OGRA Ordinance, 2002 for setting-up and operation of an LNG terminal and related facilities to a qualified selected applicant, having the requisite technical and financial credentials, for a specified location within 90 days provided however, that the applicant has submitted a complete application along with detailed feasibility study. If the applicant does not achieve financial close within 12 months of issuance of the license, OGRA may terminate the license on one month's notice. The Government may issue instructions to OGRA from time to time for implementation of this Policy and/or in respect of matters related thereto, as may be considered necessary.
If any difficulty arises in giving effect to any provision of this Policy, the Government may issue such order as may appear to it to be necessary for the purpose of removing the difficulty.
Applicability and Effect of the Policy Policy will come in force with immediate effect and will apply to all LNG import projects in Pakistan.