ECC refers gas price decision to PM

2018-09-11T01:23:45+05:00 Imran Ali Kundi

ISLAMABAD - The Economic Coordination Committee (ECC) of Cabinet Monday deferred a difficult decision on increase in gas prices and referred the matter to Prime Minister Imran Khan.

The Oil and Gas Regulatory Authority (OGRA) determined 46 percent increase in natural gas price. PM Khan last week gave go-ahead to increase the prices and linked it with the approval of ECC.

The ECC that met with Finance Minister Asad Umar in the chair on Monday decided that the PM would decide if gas price would be increased or not.

Talking to the media, Federal Information Minister Fawad Hussain said that final decision of increasing gas prices will be taken by PM Khan.

“A new system of subsidy will be evolved in such a manner that an increase in gas prices does not affect the poor lot but the affluent could contribute to reduce deficit of this sector,” Hussain said.

“In 2013, Sui Northern and Sui Southern Gas Pipe Lines were not in loss even of a single rupee, however during previous five years, total loss of SSGPL and SNGPL surged to Rs156 billion mainly due to increase in gas theft”.

He blamed the previous PML-N government for massive deficit in gas sector.

He asked former prime ministers Nawaz Sharif and Shahid Khaqan Abbasi, and former finance minister Ishaq Dar to clarify that how the loss accumulated to Rs 156 billion.

The two gas companies had requested the government to implement gas price hike determined by OGRA to bridge their deficits and improve cash flows.

The SNGPL had explained that it was purchasing natural gas from about 40 gas producers at an average rate of Rs629 per MBTU (Million British Thermal Unit) and selling at Rs399 per unit, with a net loss of about Rs230 per unit. It was reported that SNGPL’s receivables stood at Rs165 billion as of Aug 20 compared to Rs171 billion payables. The receivables of SSGCL stood at Rs203.567b against its payables of Rs148.786b.

OGRA has determined gas price for domestic and commercial consumers using less than 100 cubic metres per month at Rs294.55 per unit (180pc increase from Rs105.15 per unit), while the second slab using up to 300 cubic metres per month (both commercial and residential) would be charged Rs589.09 per unit instead of Rs210.31.

Price for third domestic slab of more than 300 cubic metres per month would be jacked up by 26.4pc and charged at Rs664.52 per unit instead of Rs525.76 while the same consumption in commercial category would be charged at Rs797.42 per unit instead of Rs631 per unit, showing an increase of 26.4pc.

All other categories in larger commercial, ice factories, industrial, captive power, CNG stations, cement plants, fertilizer, public sector power houses and independent power plants will see a 26.4pc increase. The commercial consumers and ice factories will be charged at Rs798 per unit instead of Rs631, while industrial consumers and Pakistan Steel, Wapda plants and Independent Power Producers (IPPs) will be charged Rs611 per unit instead of Rs484, captive power plants of industrial units will be charged Rs718 per unit instead of Rs568 while CNG stations will be charged Rs822 per unit instead of Rs650 per unit.

Meanwhile, the ECC has decided to import 100,000-tonne urea to provide relief to the farmers.

A bag of imported urea would be available at Rs1615 as against its cost of Rs2575 and the burden of the remaining Rs960 will be borne by the government. Total demand of urea fertiliser in the country is 5.833 million tonnes this year against previous year’s demand of 5.862 million tonnes.

The information minister informed that government would also provide gas to the local fertiliser plants to enhance the domestic production. The ECC has decided to provide fertiliser factories with 50 percent local gas and 50 percent LNG. “The LNG bills will be divided equally between the fertiliser companies and the government," Hussain said. The ECC has also decided to initiate crackdown against LPG mafia who is behind for increasing gas prices.

The information minister said price of the cylinder of liquefied petroleum gas also increased by 70 percent during the recent months. He said measures will be taken to reduce the price of LPG.

 

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