The government has implemented a new policy allowing the private sector to establish LPG Air-Mix Plants (AMPs) and has entrusted the Oil & Gas Regulatory Authority (Ogra) with the responsibility of overseeing the new business through licensing, monitoring, and enforcement, instead of regulating it.
According to the updated guidelines issued to Ogra, private sector entities are now permitted to set up LPG air-mix plants based on commercial considerations, assuming all costs and liabilities, provided they meet Ogra’s licensing and operational requirements.
Previously, the business of LPG air-mix plants was assigned to the two public sector gas companies, SSGCL and SNGPL, through subsidized schemes for remote areas about 6-7 years ago. However, due to resistance from operators and issues with subsidy settlements, the business did not flourish as anticipated. Conversely, a few private-sector LPG AMPs have managed to establish a reasonable consumer base.
The clause in the LPG Policy 2016 that mandated a 10% allocation of local LPG to local air-mix plants, as mentioned in clause 3.6.7, will not be applicable to LPG AMPs developed by the private sector.
?This clause required local LPG producers in Khyber Pakhtunkhwa and Punjab to allocate 10% of their production to LPGAMPs and Marketing Companies exclusively for distribution in those areas. Similarly, local LPG producers in Sindh and Balochistan were required to allocate 10% of their production to AMPs and marketing companies for exclusive distribution in Balochistan and rural Sindh.
Ogra will oversee the new business without regulating it. Additionally, clause 3.1.1 of the 2016 policy, which mandated public sector LPG producers to prioritize supplying LPG to gas utility companies for meeting the government’s socioeconomic agenda, will also not apply to LPG AMPs.?