LPG TERMINAL

AT TAFTAN – BALOCHISTAN
 TABLE OF CONTENTS

1 MARKET OVERVIEW _____________________________________________________ 2

2 INVESTMENT RATIONAL _________________________________________________ 2

3 PROJECT SCOPE ________________________________________________________ 3

4 PROJECT SITE __________________________________________________________ 3

5 ENVIRONMENTAL AND PROTECTION ASPECTS________________________________ 4

6 PRODUCT/PROJECT STANDARDS AND COMPLIANCE ISSUES_____________________ 4

7 REQUIREMENTS FOR GRANT OF PERMANENT LICENSE UNDER EXPLOSIVES ________ 5

8 SPECIFICATIONS FOR TEMPORARY STORAGE OF EXPLOSIVES ____________________ 6

9 REGULARITIES BY BALOCHISTAN INDUSTRIES AND COMMERCE DEPARTMENT______ 7

9.1 PARTNERSHIP ACT, 1932 _________________________________________________ 7

9.2 REGISTRATION OF FIRM _________________________________________________ 8

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1 MARKET OVERVIEW

LPG is a very clean-burning fuel, with lower greenhouse gas emissions than any other fossil
fuel when measured on a total fuel cycle, and is thus considered an environment-friendly fuel
source. The energy content and calorific value per unit of LPG are higher than any other
commonly used fuels, including coal, natural gas, diesel, and petrol.

LPG plays an important role in the energy mix of Pakistan, as it provides a cleaner alternative
to biomass-based sources, especially in locations where natural gas is not available. LPG has
gradually become a popular domestic fuel among people who live in far-flung areas and where
natural gas infrastructure does not exist.

Currently, LPG accounts for about 1.2 percent of the total primary energy supply in the country.
This low share of LPG in the total energy mix is mainly due to supply constraints and the higher
price of LPG with competing fuels like natural gas, wood, etc. Currently, there are 11 LPG
producers and 200 LPG marketing companies operating in the country has more than 7,000
authorized LPG distributors.

The current size of the LPG market is around 1.5 million MT per annum, the govt has set the
target of producing 0.8 million MT tones LPG through indigenous means and import 0.7
million MT tones during the current fiscal year to meet the country's ever-increasing energy
needs.

2 INVESTMENT RATIONAL

The total demand for LPG in the winter season hovers around 155,000 metric tons per month
out of which 50,000 tonnes is being imported from Iran (land route), 25,000 tons through
Karachi Seaport. However, local refineries and producers are producing 75,000 tons of LPG
per month. The cost of LPG being imported through Taftan, Pakistan’s border with Iran, is the
lowest

Due to the lack of proper mechanism, substandard LPG containing high sulfur content with
massive under-invoicing was being imported. This is not only inflicting a huge loss on the
national exchequer but also causing blasts in the LPG cylinder due to the high sulfur content in
it. The LPG sector has attracted approximately Rs3.72 billion investment in supply and
distribution infrastructure in the last year. There is still room for investment in the LPG sector,
as the existing facilities cannot bridge the gap between demand and supply. GoB encourages

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and facilitates the private sector to invest and operate the LPG terminal on a commercial basis
at Taftan, Pakistan border with Iran.

The terminal, as well as the distribution facilities together, will become the central point of
purchase of LPG imported through land route for wholesalers throughout the country.

3 PROJECT SCOPE

The new terminal will consist of LPG storage tanks, LPG testing laboratory, blending, loading,
and unloading facilities, and bulk plants for wholesale distribution. It's expected that it will
contribute to improving the quality of LPG supply into the country due to improved regulation
and appropriate LPG blends, thus leading to a safer use of LPG in households. Additionally,
the Project aims to provide a cost-effective LPG supply.

The terminal will be equipped with a firefighting facility with equipment, pumping facilities,
loading areas, pathways, roads as well as muster points, an on-site storage facility with
maximum storage capacity, an administration building, and a control room.

4 PROJECT SITE

The terminal will be established at Taftan, Pakistan border with Iran. The terminal, as well as
the distribution facilities together, will become the central point of purchase of LPG imported
through land route for wholesalers throughout the country.

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5 ENVIRONMENTAL AND PROTECTION ASPECTS

LPG is much cleaner than diesel. The dirty black smoke that we see coming from diesel vehicles
is particulates – a known cause of sickness and deaths. By replacing a diesel engine with an
LPG powered equivalent, over 90 percent of this particulate matter can be eliminated. LPG
powered vehicles emit significantly fewer greenhouse gases and other pollutants than petrol-
powered equivalents. LPG typically has around 20 percent less ozone

forming potential (a measure of the tendency to generate photochemical smog), between 10

and 15 percent lower greenhouse gas emissions, and only one-fifth of air toxics emissions.

LPG delivers clear environmental benefits over diesel and petrol. Recent independent
automotive tests submitted to the Department for Transport have shown that LPG emits:

• 120 times less particulate matter compared to diesel;

• less than half the NO’s of petrol and less than one-twentieth the numbers of diesel;
• and 17 percent less CO2 compared to petrol and 2 percent less CO2 compared to diesel,
on a well to wheel basis

LPG’s impact on the environment in the unlikely event of spillage is minimal as propane is
lighter than water. It therefore readily disperses without combustion and with no contamination
of watercourses or surrounding land – unlike petrol or diesel where spillage is a major
environmental concern.

6 PRODUCT/PROJECT STANDARDS AND COMPLIANCE ISSUES

Rules and regulations which govern any explosive material also apply to LPG. Its
transportation, storage, construction of storage facility, filling of cylinders and their
transportation, etc. all need to be carried out according to the standards and specifications
provided by the explosive department, government of Pakistan. For LPG business, a license
will be required from the explosive department of the concerned province. Details have been
provided in the following lines.

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7 REQUIREMENTS FOR GRANT OF PERMANENT LICENSE UNDER
EXPLOSIVES

1. Formal application with attested photocopy of National Identity Card briefly stating the
purpose of obtaining License and justification.
2. Application in the prescribed Form C, duly filled in and signed by the applicant.
3. Distance Form D, duly filled in against all columns thereof as per Schedule VI of the
Explosives Rules 1940 and signed by the applicant.
4. Original treasury receipt for the amount payable as per column 5 of schedule IV of the
Explosives Rules, 1940 showing the amount paid under the following Head of Account
in any branch of the National Bank or Government Treasury.
5. 1200000-Receipts from Civil Administration & other Functions
6. 1260000-Economic Services Receipts 1264000-Industrial and Mineral Resources
1264100-Industrial and Mineral Resources Industrial Safety Explosives Department.
7. No objection certificate along with the signed plan from the District Authority
concerned to the effect that the Authority has no objection to the grant of license to the
application for possession/sale of Explosives. No objection certificate if not submitted
by the applicant will be obtained by the Department from the District Authority after
receipt of other complete particulars from the applicant.
8. Six copies of the plan duly signed by the applicant and drawn to scale on durable paper
showing full constructional details of the proposed LPG storage site, and site with full
surroundings and important landmarks to facilitate its location. The distances
maintained around the proposed LPG storage site shall be marked clearly.
9. Documents showing the extent of possession/ownership of land for maintaining
required safety distances from the explosive’s storage magazine.
10. Present consumption of explosives in the area and nature of work requiring the use of
explosives.
11. Expected market potential in 5 years from now with full justification.
12. Complete details of the present consumers of explosives in the area giving their names,
complete postal addresses, nearest Police station(s), approximate daily consumption of
explosives by each consumer stating their nature of work requiring explosives.
13. Details of other explosives magazine(s) 6 existing if any within a radius of 50 KM from
the site of the proposed magazine.

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 14. Any proof/certificate showing competence and experience of the applicant or his
authorized worker/agent/employee/supervisor in the handling of explosives.
15. Details of a vehicle to be used for transport of explosives from source of supply to the
storage magazine and the approximate distance in between.
16. Undertaking by the applicant to the effect he will observe strictly all the requirements
of Explosives Rules 1940 and submit Fortnightly Reports on the three prescribed Forms
B-I, B-II, and B-III regarding the purchase, use, etc. of Explosives.
17. Certificate to the effect that guards over the magazine will be provided 24 hours by the
license.

An LPG tank after ten years shall be examined for re-qualification. Re-qualification is a
procedure by which a cylinder is inspected and retested to determine its acceptability for
continuous service. This method determines if a tank is condemned (a cylinder that does not
pass the required tests and can not be repaired), or, repairable. A tank shall be repaired for cuts,
corrosion, or dents five years after the time of re-qualification. Repair is defined as the removal
and replacement of parts or attachments of LPG cylinders and other corrective measures.

A condemned cylinder, as the standard specifies, is scrap and should be destroyed either by
cutting diagonally, or crushing the cylinder or any part so that it can no longer be used.
Consumers are enjoined to make sure that the embossed markings of the brand name or name
of the owner are printed on the cylinder.

To ensure safety throughout the LPG supply chain, LPG storage tanks, cylinder bowsers, and
distribution outlets of the licensees should meet the minimum safety standards as laid down in
applicable Rules.

Decanting of LPG from cylinder to cylinder is prohibited and OGRA can cancel licenses of the
LPG marketing companies involved in this activity directly or indirectly.

8 SPECIFICATIONS FOR TEMPORARY STORAGE OF EXPLOSIVES

Following detailed guidelines have been provided by the explosive department of the
government for the companies dealing in explosive materials. The LPG businesses must
comply with the following.

1. A temporary storage may be in an above-ground strong wooden or Bamboo Cabin or

preferably a damp proof pit.

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2. The height of a cabin or depth of a pit shall not be less than 6 feet.

3. There shall be no uncovered iron or steel in the construction of cabins.

4. For the above-ground cabin it is necessary to have an earthen mound or screen wall in
between the Explosives cabin and the cabin containing detonators.

5. The floor of the temporary storage shall be covered with wooden planks.

6. Main explosives and detonators shall be stored in separate cabins or pits at least 10 feet apart.

7. The explosives shall be covered with tarpaulins awning to protect against sun and rain and
the margin of a pit shall be so raised as not to allow rainwater to drain inside it.

8. Shelves, benches and fitting shall be of wood or bamboo free from iron nails and grit.

9. The capacity of a pit or a cabin per 16 sq ft. of the base area with 30% more area as working
space.

10. At least 6 feet high barbed-wire fencing shall be provided all round at a distance of not less
than 30 feet from the storage cabins/pits. Other safety distance shall be maintained as per
Schedule VI of the Explosives Rules, 1940.

9 REGULARITIES BY BALOCHISTAN INDUSTRIES AND COMMERCE

DEPARTMENT

9.1 PARTNERSHIP ACT, 1932

Meaning and Nature of Partnership

• Association of two or more than two persons.

• Result of agreement between two or more persons.
• The agreement must be to share the profit of the business.
• Business must be carried on by all or any of them acting for all.
• Unlimited Liability
• Restriction on transfer of Interest
• Unanimity of consent

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9.2 REGISTRATION OF FIRM

Under the partnership act, all the firms don't need to get themselves registered. But an
unregistered firm may suffer several disabilities.

An Application in the prescribed format (Form A) with the prescribed fee of PKR. 20,000 has
to be submitted to the registrar of the firms of the state in which the place of business of the
firm is situated.

The Application must contain the following particulars

• The name of the firm

• The place of the business of the firm.
• The names of any other places where the business of the firm is carried on.
• The date when each partner joined the firm
• The names in full and permanent addresses of the partners.

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