ISLAMABAD-The federal government is working on a plan to build increased storage for liquefied petroleum gas (LPG) at Karachi port and will procure big LPG vessels in order to reduce the prices of the fuel of the poor.
The Special Investment Facilitation Council (SIFC) is working on increasing LPG storage in the country, said Masroor Khan, Chairman Oil and Gas Regulatory Authority (OGRA), while briefing Senate Standing Committee on Petroleum. Senate Standing Committee on Petroleum met under the chairmanship of Senator Mohammad Abdul Qadir.
Official of the Petroleum Division provided a briefing on LPG rates, explaining that OGRA determines LPG prices for producers, the margin of MCs (marketing companies), and consumers. The pricing is based on various parameters, including the producers’ price per metric ton, which is determined monthly according to the Saudi Aramco Contract Price (40% Propane: 60% Butane). The distribution margin is fixed at Rs35,000 per metric ton, equivalent to Rs413 per cylinder. Additionally, there is a petroleum levy on indigenous production at Rs4,669 per metric ton, translating to Rs55 per cylinder. GST, previously at 17% and now increased to 18% since February 2023, applies to the aforementioned parameters. The officers also clarified that the compilation of these figures makes up consumer price.
The secretary of the Petroleum Division added that they are actively exploring indigenous sources and will address infrastructure constraints in their efforts to stabilize gas prices. Chairman of OGRA, Masroor Khan provided the committee members with a briefing on the reasons behind the increase in LPG prices. Senator Saadia Abbasi pointed out that the rise in LPG cylinder prices is attributed to the taxes imposed on people. Similarly, the chairman of the committee, suggested the Petroleum Division to explore and utilize gas transportation via seaports and large ships to mitigate price increases, ultimately benefiting the larger population struggling with the rising costs.
Chairman Ogra said that currently, operating large ships for LPG procurement is not feasible due to storage constraints. Efforts are underway to determine how to increase LPG storage at Karachi ports, he added. Chairman Ogra said that to get big ships of LPG, required bigger storage capacity, which is not currently possible due to less space. However, he said that LPG storage capacity will be increased at Karachi Port. Following the increase in storage capacity, big LPG vessels having a capacity of 20000 to 25000 tons will be procured, which will help in reducing the prices of the commodity for the poor consumers.
The committee members discussed the suspension of gas supply in industrial units in the province of Sindh for two days a week, causing a production loss of 28 percent, as well as a delay in the completion of the supply. The Ministry for Energy (Petroleum Division) officials briefed that annually more than 10% of gas is depleting from reservoirs at different gas fields, while the demand for gas is increasing day by day. This year, SSGC (Sui Southern Gas Limited) is receiving around 90 MMCFD less gas compared to last year. The secretary of the Ministry for Energy (Petroleum Division), Momin Agha added that the decline has been continuous for the last 8 to 10 years, and they are looking forward to a comprehensive plan that would scrutinize policymaking. The committee members conducted a thorough analysis of supply statistics and gas depletion over the years. They recommended the Ministry for Energy officers (Petroleum Division) to address the discrepancies for conclusive results.
In conclusion, the chairman of the committee, Mohammad Abdul Qadir recommended that officers from the Ministry of Energy (Petroleum Division) reach out to international companies and encourage them to invest in Pakistan. He noted that since 2015, the ministry has been purchasing LNG, limited to 2-3 bidders, despite numerous bidders worldwide. Allowing private entities could make the price more competitive. He also highlighted that several government and private companies are non-operative due to minor disputes, suggesting that the ministry should resolve petty matters to achieve positive collective results. The secretary of the Ministry for Energy (Petroleum Division) assured the committee members that they are looking forward to a comprehensive plan and policy review, and improvements in the results can be expected within a few weeks.