North South Gas Pipeline (NSGP) project has been the talk of town these days as summaries are being forwarded by MoE-PD for approval of ECC / Cabinet of Minister for kick-starting this project with active support of Russian government and corporate entities. There have been reported news of laying 56 inch diameter North South Gas Pipeline which is indeed a matter of concern in view of non-transparent transport capacity declaration by Sui Companies. SSGCL and SNGPL are reportedly part of North South Gas Pipeline (lead by ISGSL as per notice available on GoP website)and this would be another blow to an efficient and open gas transport system in Pakistan – given inherent incapacity and lack luster management of current operational affairs of SSGCL / SNGPL with high number of UFG losses. Let there be no doubt that North South Gas Pipeline project can only be successful if it is planned for execution under TPA Rules 2018 with transport implementation under properly defined Network Codes..
Third Party Access Rules 2018
Third Party Access Rules 2018 for gas transmission operations under open access, although needing some corrective actions regarding capacity allocation in terms of MMSCFD and MMBTU per day, provide the framework for implementation of open access for shippers of gas in Pakistan. First and foremost, requirement for such operations is correct and transparent calculation of Transmission Capacities by Transporters. Extract of Clause 4(1) of TPA Rules 2018 is reproduced in above picture. Unfortunately, both SSGCL and SNGPL are failing in complying with the requirements of clause 4(1) and Schedule II of TPA Rules 2018.
Following information is replicated from website of both Sui Companies which indicates that Regulator (OGRA) needs to intervene in this matter to create transparency in this matter of significant importance.
SSGC has not reported design capacities of the segments with related inlet points and exit points. The reported available capacities need to be checked for prevention of Capacity Hoarding under TPA Rules 2018.
SSGC has reported segmental capacities and this needs to be checked by OGRA and reported design capacities should be part of permanent information available on SSGC website. Change in design capacities should be submitted to OGRA for approval and amendment in design capacity information on SSGSCL website. Absence of such information on SSGCL website is keeping the door open for manipulation and capacity hoarding.
SNGPL have played more smartly than SSGCL as they totally ignored TPA Rules 2018 to report design capacities of the segments with related inlet points and exit points. The reported available capacities need to be checked for prevention of Capacity Hoarding under TPA Rules 2018.
Same is true if we look at above table that no reported segmental capacities of SNGPL network are available and this needs to be checked by OGRA and reported design capacities should be part of permanent information available on SNGPL website. Change in design capacities should be submitted to OGRA for approval and amendment in design capacity information on SNGPL website. Absence of such information on SNGPL website is keeping the door open for manipulation and capacity hoarding.
Role of OGRA in NSGP Project
Role of OGRA is very important in declaration of Design Capacities / Available Capacities of various segments on Transmission Networks of SSGCL and SNGPL due to following reasons:
- Non-declaration of design capacity of a Transmission Pipeline Segment prevents regulator from checking for Capacity Hoarding
- Under-declaration or low declaration of design / available capacity of a Transmission Pipeline Segment keeps the door open for inappropriate allocation of funds for Asset Development (Sui Companies always benefit from return on Assets) in Annual Revenue Requirements. This promotes in efficiency which is contrary to OGRA ordinance.
- Non-declaration or mis-declaration of design / available capacity of existing transmission system hinders prudent decision making at policy level for new investments like North South Gas Pipeline project. A wrong investment decision will serve as a liability rather than an engine of economic uplift of the country.
North South Gas Pipeline project may indeed be a great infra-structure development project that should be implemented in current low-oil-price era. Reduced developmental activity in the world coupled with reduced equipment prices and falling interest rates provide a window of opportunity for Pakistan to channelize investments towards carefully selected energy projects. Russian investment is expected for North-South Gas Pipeline Project (under Open Access regime) . This Multi-Billion Dollars Project has the potential to cause embarrassment in near future if RLNG forecast quantities do not materialize for flow through this pipeline. Current framework of FSRU-based RLNG terminal has proven over time that it can work only when capacity payments are guaranteed through so called “Ring-Fenced” supply chain – despite government efforts to implement “Ring-Fencing” entire RLNG supply chain has accumulated “Payables” without willing payers. Under a sustainable business model Capacity Payments can only be ensured (not guaranteed as currently is the case) through back-to-back commercial agreements with consumers. Such commercial arrangements in turn are possible when you create long-life assets that offer gas (RLNG) quantities at compatible prices matching consumer expectations. In this context it is suggested that Land Based LNG Storage and regasification facilities should be made part of North-South Gas Pipeline project to create a long-life asset for sustainable operation of project. It cannot be over-emphasized that success of this project lies in transparent pipeline capacity calculation / declaration of existing Transmission Capacities.
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