LAHORE - The business community on Friday urged the government to revise gas exploration price formula as the rates being offered to the companies previously involved in exploration are not commensurate with prices being offered to new companies as such are acting as a deterrent for increasing production.

LCCI President Farooq Iftikhar said that despite having high gas reserves Pakistan is facing huge gas shortages as the government is offering $6 to $6.5 mmbtu to the explorer which is already unattractive for exploration companies as India has attracted investors by offering a lucrative $8.5 per mmbtu to the explorers.

He said that increase in domestic gas reserves is economically most viable option raise gas supplies while a pragmatic gas pricing is most robust instrument in stimulating exploration and development of domestic gas.

Therefore, he urged the government to act prudently by offering better prices to the explorers. The price offered looks ludicrous and unworkable when the government is ready to import LNG at $14-15 per mmbtu or buy gas from Iran at around $10 per mmbtu” he said adding that it would be more secure to explore our own natural resources instead of paying higher prices to foreigners.

The LCCI President said it was very unfortunate that many discoveries remain capped for various reasons and no effort on the part of the government of Pakistan is being spelled out. He said many gas fields where the production has declined need fresh investment to increase gas flows. He said at current rates of $ 4.5 mmbtu it is not commercially viable for oil and gas exploration companies to continue or restart operations.

Farooq Iftikhar said that the government would not be able to put economy back on rails in the presence of an acute shortage of gas that has not only decelerated economic activities but is also proving a big impediment to job creation.

He said that an increase in exploration price level would not only motivate exploration activity right away but many social and economic benefits will accrue from it besides saving of hard cash. Thus, the opportunity cost of lowering gas reserves in terms of price of alternatives is much higher, which eventually in being borne by the end users.

The LCCI President said that only because of an acute shortage of gas in the country a number of industrial units had already shifted their operation to other destination and if the price mechanism for the exploration companies is not revised forthwith, it would likely to hamper new local and foreign investments.