Islamabad - To overcome the gas shortage issue in winter seasons and ensure availability of gas in far-flung areas the government is planning to reduce the LPG price and add more RLNG to the system on the basis of   Weighted Average Cost of Capital (WACC).

The government is also planning to impose surcharge on gas consumers to recover cost of RLNG.

Comprehensive policy would be finalized to bring down prices of LPG at affordable level and ensuring its availability in far-flung areas of the country, said Special Assistant to Prime Minister (SAPM) Nadeem Babar on Petroleum while talking to a group of journalist here on Wednesday. The SAPM was accompanied by Federal Minister for Power Omer Ayub Khan and Secretary Petroleum Mian Asad Hayaud Din.

Regarding LPG prices, Nadeem Babar said that a committee under Deputy Planning Commission was working on the policy and would present its report within two weeks. In reply to a query on high margins on LPG, Omar Ayub said under the new policy we were looking the marketing and distribution margins too.

About imposition of surcharge on gas consumers, the SAPM said the gas companies-Sui Northern Gas Pipeline Limited (SNGPL)-had requested federal government for a proper mechanism to sell RLNG to domestic and commercial consumers. 

He said that RLNG was defined as petroleum product in Oil and Gas Regulatory Authority (OGRA) Ordinance through an Act of Parliament. “Former Minister for Petroleum Shahid Khaqan Abassi introduced and imposed RLNG as petroleum product since 2016 which need to be defined as gas again through Act of Parliament,” Babar maintained.

He further said that the ECC’s approval would be taken for the price mechanism and sent to the federal cabinet for approval. He said the ECC decision provided a mechanism for recovery of past arrears of RLNG diversion made during the past two winter seasons on the SNGPL network, which stood at Rs.74 billion. Replying to a question, SAPM said the cost of North South Pipeline had been increased by changing its route and diameter of pipeline. The new route of around 1700km pipeline would be laid between Karachi to Lahore and the diameter of the gas pipe would be 48 inches to 56 inches 

Earlier the capacity of gas transmission was 1 bcf which has been now enhanced to 1.6 bcf. The pipeline would have the capacity to increase the gas volume up to 2 bcf keeping in view the future need of the gas which could reach up to 3 bcf in next ten years. 

“Pakistan side has nominated a technical committee and awaiting Russian side to announce their technical team so that the design, right of way of the propose pipeline would be discussed. Two pipelines with compressors would be laid down,” Nadeem Babar said.

He said the Supreme Court decision in GIDC had compelled the government to show progress on the proposed pipeline till February 2021.

Talking about the policy structure for up-gradation of fuel quality of existing oil refineries, he said that Euro-V grade petrol had already been replaced since September 1. However, he said that 60 percent of total consumption of diesel which refineries were producing should be Euro-V standard by January 1, 2021. He said the government and refineries had agreed on most of the points under the new policy structure for up-gradation and the draft would be submitted before the federal cabinet approval within one month.

Talking about shortage of gas in Karachi, Nadeem Babar said the provincial government of Sindh had not informed them regarding the decision taken in cabinet meeting on right of way for laying down 17km long gas pipeline from Pakland to Sui Southern Gas Company (SSGC). Work on 12km portion of gas pipeline had already been completed and for the remaining 5km they were awaiting approval for right of way from the government of Sindh, he added. 

He said that out of 1200 mmcfd requirement of gas for Sindh, 900 mmcfd was utilized in Karachi alone. “In case the provincial government allows to lay down pipeline, the federal government will complete the gas pipeline by third week of December to resolve the gas shortage through pumping additional RLNG gas,” he maintained. Nadeem Babar said the province was getting 970 mmcfd from its own production and there was a shortfall of 70 mmcfd which would be met through RLNG.

He said on the request of industrialists from Karachi, the federal government was providing RLNG at Rs930 per mmcfd under five months (October-February 2021) arrangement. March-April onward, they would receive gas from SSGCL system at previous gas rates.

He said that the government had been utilizing LNG terminals at full capacity at 1260 mmcfd from May 2020.

Nadeem Babar said that Petroleum Division was forwarding a proposal to the Cabinet Committee on Energy (CCoE) today (Thursday) on unbundling of two gas companies-Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC). 

In the first phase, the division proposed the energy committee to separate transmission business of the gas companies to distribution. On later stage, he said, distribution task of the gas would further be distributed among the small gas companies.