Govt gives green signal to gas price hike

PM for comprehensive plan to end gas theft, Gets briefing on Tapi, Pak-Iran gas pipeline project

2018-09-05T02:06:50+05:00 Fawad Yousafzai

ISLAMABAD - Prime Minister Imran Khan Tuesday has given a green signal to the gas price hike for the two government-owned gas utilities of Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC).

After the PM approval the summary for the gas price increase will be presented to the next meeting of the Economic Coordination Committee (ECC) of the Cabinet, official sources told The Nation. Chairing a briefing on the oil and gas sector the PM was informed that there is no other way except the price increase to bridge the revenue gap of the SNGPL and SSGCL.

Minister for Petroleum Ghulam Sarwar Khan, Additional Secretary Incharge Petroleum Division Mian Asad Hayaud Din and senior government officers were present during the briefing. Additional Secretary Incharge Petroleum Division Mian Asad Hayaud Din briefed the prime minister, in details, about the existing situation vis-à-vis demand and supply in the oil and gas sector.

For the last five years, gas prices have not been increased and as a result the two state-owned natural gas companies SNGPL and SSGCL are losing money due to huge difference in the gas purchase and sale prices. SNGPL is purchasing natural gas from gas producers at an average rate of Rs629 per million British Thermal Unit (MMBTU) and selling at Rs399 per unit, with a net loss of about Rs230 per unit.

Although Oil and Gas Regulatory Authority (Ogra) had forwarded its tariff determination with about 30 percent average increase in the prices of gas for the gas consumers but this could not be notified due to change of the government.

Under the Ogra rule, the regulator was required to notify the prices in case of failure of the federal government within 40 days to respond to its determination but the regulator did not do so.

Now the government has two options, either to move summary for the price increase to the ECC with the PM approval or wait till the Ogra’s determination on the next petition for the price increase by the SNGPL and SSGCL, the source said.

In the first meeting of the ECC, under the PTI government, the Petroleum Division had moved a summary and sought 30 percent increase in gas prices for all categories and 186 percent for domestic consumers to bridge the revenue shortfall of both the gas utilities. However the ECC deferred the decision and returned the summary to the Petroleum Division.

If the ECC approved the Ogra’s recommendation then there will be up to 186 percent increase for the domestic consumers and 30 percent average increase.

Meanwhile a press statement issued here stated that the prime minister also directed the Petroleum Division to chalk out a comprehensive plan for checking gas theft in the country which was causing a loss of Rs50 billion to the national exchequer annually.

The prime minister was also apprised about the progress into construction and operationalisation of Tapi and Pak-Iran gas pipeline along with other significant projects which were in the pipeline to meet growing energy needs of the country.

The secretary also highlighted various issues including the issue of rationalization of gas sale prices, recovery of receivables, non implementation and frequent altering of that policies resulting in erosion of the investors’ confidence and non-awarding of exploration blocks during the last five years.

The prime minister directed that a comprehensive plan of action with delineated timelines should be submitted at the earliest to address various issues of the oil and gas sector.

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