Planning Commission may review gas allocation to fertiliser sector

Officials say there is no justification for circumventing gas allocation policy.


The past govt had allocated gas directly from fields to four fertiliser plants, including Engro, Dawood Hercules, Pakarab Fertilizers and Agritech without a bidding process. PHOTO: FILE

ISLAMABAD: The Planning Commission has recommended that keeping in mind the nationwide shortage of gas, the practice of allocating gas directly from gas fields to the fertiliser sector be reconsidered, till a market-based mechanism for the auctioning of gas resources is established.

The past government had allocated gas directly to four fertiliser plants, including Engro, Dawood Hercules, Pakarab Fertilizers and Agritech. Gas was allocated to these companies without a bidding process, even though the Planning Commission had come up with a proposal to auction resources in a transparent manner. However, the mechanism was not followed, which led to resentment in the power sector.

Officials of the water and power ministry were of the view that the ‘normal’ gas allocation system was bypassed to favour some parties, and that the Pakistan Muslim League-Nawaz (PML-N) government was likely to review the decision to ensure transparency and address the concerns of the power ministry.

The Planning Commission says a committee formed to finalise arrangements for the allocation of gas to fertiliser plants from dedicated sources has decided after due deliberation that there is no justification for laying new pipelines under the plan.

Documents available with The Express Tribune reveal that gas allocation directly from fields to fertiliser companies may be reconsidered by the Economic Coordination Committee (ECC) in the light of extreme gas shortages for the power sector and the negative resultant impact on the economy.

“Furthermore, Planning and Development will welcome steps to put in place a market-based mechanism for auctioning of the gas in order to increase transparency and move towards a modern market-oriented gas industry,” documents say.

Officials said that the ECC had approved a national gas allocation policy, placing the power sector at second priority after domestic consumers, in order to provide more gas to power plants in a bid to overcome periodic power outages. The Ministry of Water and Power had lodged a strong protest before the ECC when it decided to allocate gas to fertiliser plants directly from dedicated sources.

It said the ECC had prioritised the power sector so that power generation could be enhanced to tackle the load-shedding problem in the country, and that there was no justification to circumvent it in this case. Officials also said that there was no precedent to provide pipeline-quality gas directly to any consumer.

Published in The Express Tribune, May 16th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

COMMENTS (1)

zahid hamid | 10 years ago | Reply

Fertlizer is also back bone of our agri eocnomy ,if Govt would not help out their problems, then Govt would have to import Fertilizer by using coslty foriegn exchange and subsidy to maintain pricing with local market bcoz imported fertilizer is more costly in international market. I think Govt should allocate gas one month rota basis to all four units by curtaling CNG sector or sholud ban CNG for vehicle more than 800 cc.

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ