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Energy Minister Udaya Gammanpila
By Chandani Kirinde
The Government has formulated a National Policy on Natural Gas (NPNG) which will see the establishment of a ‘National Gas Company’ with necessary powers, resources, and operational independence to handle all Government economic transactions relating to the natural gas industry in the country. It will be the Single Credible Creditworthy Entity (SCE) to handle all economic transactions pertaining to Natural Gas on behalf of the Government, either as its own business operations or by entering into Public-Private Partnership (PPP) ventures, a copy of the NPNG seen by the Daily FT says.
It is envisaged that this will enable the Government as well as Sri Lankan business community to participate in commercially-viable upstream, midstream and downstream projects including exploration and production of indigenous natural gas, development, ownership, and operation of the Liquefied Natural Gas (LNG) facilities and/or internal natural gas storage, pipeline transportation and distribution infrastructure facilities as appropriate.
The Government, in compliance with applicable financial and other regulatory criteria, will decide and prescribe minimum threshold limits on liquidity, revenues, net income, net worth and other relevant corporate parameters that are indicative of operational capacity of the relevant local and international PPP partners involved in related ventures, the Policy states.
The NPNG has been prepared in consultation with relevant stakeholders and has been published by Minister of Energy Udaya Gammanpila.
The policy expresses the intention of the Government to expand the sustainable use of natural gas across all sectors to maximise the economic value of a low-carbon energy source and industry feedstock that will soon be produced locally.
The proposed policy envisages enhanced private sector participation in the Natural Gas sector under effective regulatory regime.
“The private sector plays a leading role in global energy markets, including the natural gas industry. There are profitably run natural gas-based private ventures all over the world that generate sufficient returns to re-invest and grow the industry.
In contrast, Sri Lanka’s energy sector is dominated by State-Owned Enterprises. Introduction of the natural gas industry to Sri Lanka opens the opportunity for engaging the private sector on mutually-beneficial terms, sharing both investment and market risk with the State,” the policy statement says.
The NPNG aims to capture this opportunity by enhancing private sector participation under a well-designed regulatory regime to optimise the gains for the national economy and public.
The Government will facilitate access to natural gas from indigenous resource deposits as well as through imports by means of implementing development and regulatory measures applicable to up, mid- and down-stream operations involved in natural gas value chains.
These would include fiscal stability mechanisms to protect investors from future tax regime changes or use-specific subsidies, flexible cost-revenue allocation, equitable distribution of defined local demand between multiple producers, and appropriate market share mechanisms between produced domestic gas and re-gasified imported LNG.
The NPNG envisages several goals including an increase in penetration of natural gas in all sectors towards achieving a minimum 30% of the total energy mix by 2030 and to create an avenue of foreign exchange earnings established through export and any viable commercial activities using natural gas.
To ensure efficient and timely implementation of the proposed policy, a Gas Utilisation Master Plan (GUMP) will be prepared and updated periodically by the Ministry covering actions in all main sectors including power, transport, industry, household, and commercial sectors.
It will be revised regularly during the industry’s development to ensure that the changing requirements of all stakeholders are met.
