ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet yesterday witnessed verbal brawl between Finance Minister Ishaq Dar and Ogra officials on the issue of tax on gas consumers.
The top economic decision-making body of the country was discussing a plan to collect Rs101 billion from natural gas consumers for LNG, which was strongly opposed by Oil and Gas Development Regulatory Authority (Ogra).
Finance minister came down hard on the Ogra official who tried to explain the scope of Gas Infrastructure Development Cess (GIDC). The official remarked that government, instead of further burdening the masses, should utilise Rs150 billion collected through GIDC in last fiscal year for the construction of LNG pipeline.
Sources informed The Nation that the government intends to get additional Rs101 billion from the masses to build pipelines for gas companies. The government has already collected Rs145 billion through GIDC on gas sales in the ongoing fiscal year. It however has assured the parliament and courts that GIDC amount would be utilised for the construction of the gas pipelines.
The ECC had approved in September last year borrowing of Rs101 billion from commercial banks to SNGPL and SSGCL to carry out augmentation of pipelines for phase-II of the upcoming LNG. It also decided that finance ministry would provide anticipated indigenous supplies against GoP guarantees.
However, the Ogra has strongly opposed the idea of further burdening the gas consumers. It stated that financing of all mega gas pipeline projects should be through GIDC to avoid double impact on consumers as the same consumers are paying GIDC and return on assets.
It also said that financing of such projects from GIDC would not be added in the rate base for return purpose, which in fact invites double treatment at the cost of consumers. Therefore, Ogra held that this financial burden might not be passed on to general public and all such projects should be financed from GIDC which had been established exclusively for the purpose.
Meanwhile, on a proposal regarding issuance of policy guidelines to Nepra for power tariff rationalisation, the ECC approved up to Rs3 per Kwh reduction in existing base tariff for the industrial consumers of all Discos for the year 2015-16, for units consumed from January 1, 2016 onwards.
The committee noted and placed on record the report presented by Secretaries Committee concerning LNG sale and purchase agreement. It may be recalled that the ECC while considering a proposal on January 12, 2016 submitted by the Ministry of P&NR had approved in principle the recommendations of the pricing committee to enter into agreement with Qatar Gas-2.
ECC had also allowed PSO as buyer to execute the sale and purchase agreement on government to government arrangement. Simultaneously, the ECC had constituted a committee comprising secretaries of P&NR, finance division, law ministry, and Ogra chairman to examine some related legal and commercial aspects of the proposal. The committee accordingly prepared and submitted its report.
The ECC on a proposal by Ministry of P&NR regarding financing of Pipeline Infrastructure Development Plan for the upcoming LNG and anticipated indigenous supplies reaffirmed its decision of September 3, 2015 allowing gas companies to arrange funding from commercial banks backed by GoP Sovereign Guarantee.
The ECC on a proposal submitted by the petroleum ministry gave ex-post facto approval in respect of six cargoes arranged by PSO from Qatar Gas under government-to-government arrangement on FOB basis on board FSRU as LNG carrier.
The chair on this occasion gave instructions for reconvening ECC meeting on Friday January 26, 2016 to consider important left over agenda items including provision of salaries to the Pak Steel Mills and supply of wheat to TDPs (temporary displaced persons) through the WFP (World Food Programme).