The law ministry comes up with its views following directives from the Economic Coordination Committee (ECC). The petroleum ministry had sought comments on the impact of shifting the Rs49-billion burden onto gas consumers by raising the unaccounted-for-gas (UFG) ceiling and giving some incentives to gas utilities.
It also wanted to know whether the move would affect investigations into the Ogra scam being conducted by the National Accountability Bureau (NAB).
“The law ministry stayed away and asked the petroleum ministry and Ogra to deal with the issue themselves,” an official told The Express Tribune. Now, the government is in a fix how to settle the matter, which arises in the wake of higher collections from gas consumers following an increase in UFG ceiling, which was later challenged in court.
Earlier, gas utilities – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – sought opinion of Minto Law firm, which said the government should issue directives to the regulator to take a decision on the revenue requirement of gas utilities. However, the ECC called for seeking opinion of the law ministry.
The government warns that the gas utilities will go bankrupt if they are not bailed out as they will not be able to repay Rs49 billion. Now, in the backdrop of protest sit-ins in Islamabad, the government is undecided whether to pass the multi-billion-rupee burden on to consumers, which will leave it unpopular among the people.
It is already working on a plan to increase gas tariffs by 20% according to a decision of the regulator, a move that will force consumers to pay an additional Rs45 billion. This is in addition to the Rs49 billion that the government wants to recover from the consumers by increasing the UFG level.
After the increase in UFG ceiling, which covers theft and leakage, from 5% to 7% by Ogra in 2010, then headed by Tauqeer Sadiq, the state-owned gas transmission and distribution firms earned an additional Rs49 billion. NAB, however, termed it a scam.
In remarks submitted to the ECC, the Finance Division pointed out that the petroleum ministry and Ogra should ensure that the provisional arrangement proposed in the ministry’s summary did not violate the judgment of the Lahore High Court in the matter and also did not adversely affect NAB investigations.
A senior government official pointed out that the socio-political programme of the government that provided gas to untapped villages had increased the ratio of retail consumers compared to bulk users. “This has caused an increase in the UFG level.”
Apart from this, he added, the law and order situation had also its effects and if the government did not bail out the distribution companies, they would collapse financially.
Published in The Express Tribune, September 27th, 2014.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
1713853507-0/MalalaHilary-(2)1713853507-0-270x192.webp)
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ