ISLAMABAD: The establishment of the planned terminal of liquified petroleum gas (LPG) in Chaghi district of Balochistan province will help to improve the supply of gas to consumers in Pakistan, WealthPK reports.
The LPG terminal is being set up by the Board of Investment (BoI) in collaboration with the Ministry of Energy. The project is expected to be completed within two years at an estimated cost of Rs1 billion.
The BoI has sought proposals for the project while the Ministry of Energy (Petroleum Division) is the implementing agency of the scheme. The preferred payment modes are finance, build, operate and own.
A BoI official, who wished not to be named, told WealthPK that LPG plays a significant role in Pakistan’s energy mix since it offers a cleaner alternative for biomass-based energy sources, particularly in areas where natural gas is not readily available.
LPG has become increasingly popular as a home fuel among people, who live in remote areas without natural gas infrastructure. The least expensive route for importing LPG is through Taftan, Pakistan’s border with Iran. Therefore, the Balochistan government supports and makes it easier for the private sector to finance and run LPG terminals in Taftan on a commercial basis.
The new terminal will include bulk plants for wholesale distribution, blending, loading and unloading facilities, an LPG testing facility, and LPG storage tanks.
Due to better regulation and suitable LPG mixes, it is anticipated that the plant will help to increase the supply and improve the quality of LPG in the country. It will result in a safer use of LPG by domestic consumers.
“The project is also meant to offer LPG at a reasonable price to consumers in the country,” said the official.
According to WealthPK research, the consumption of LPG in the country is approximately 1.2% of the total primary energy supply. LPG forms a relatively low share of the total energy mix due to supply constraints and its higher price as compared to competing fuels such as natural gas and wood, etc.
Presently, there are 11 producers and 200 marketing companies of LPG in Pakistan, with more than 7,000 authorised LPG distributors.
“The government has set the goal of producing 0.8 million metric tonnes of LPG through indigenous means and importing 0.7 million metric tonnes of the commodity in the current fiscal to meet the country’s ever-increasing energy needs,” Tuaha Adil, a research economist at an Islamabad-based think tank, told WealthPK.
The current size of the LPG market is around 1.5 million metric tonnes per annum. During the winter, the average monthly demand for LPG is around 155,000 metric tonnes, of which 50,000 tonnes are imported from Iran through land route and 25,000 tonnes via Karachi Seaport. However, 75,000 tonnes of LPG are produced locally each month by refineries and manufacturers.
