Political move: PM removes curbs on new gas supply schemes

Tariffs will be increased to finance expansion of pipeline network.

ISLAMABAD:

Prime Minister Nawaz Sharif has lifted the ban on new gas supply schemes in an apparent political step to pacify voters in different constituencies, but the move will add to woes of existing consumers who face low gas pressure or even outages during winter.

Officials of the Ministry of Petroleum and Natural Resources made this disclosure before the National Assembly Standing Committee on Petroleum and Natural Resources, which met under the chairmanship of Chaudhry Bilal Ahmed Virk here on Monday.

No doubt it was good news for the parliamentarians who insist on new gas connections in almost every meeting.

The new schemes, which come in the backdrop of fast depleting reserves, will push up gas prices as existing consumers will be forced to pay the cost of building infrastructure for expanding the pipeline network.

During the previous government of Pakistan Peoples Party, the Oil and Gas Regulatory Authority (Ogra) had placed a ban on new gas schemes, arguing that existing consumers had the first right to consume energy resources. Apart from this, it said, gas distribution companies were bound to provide supplies to these consumers before going for connections under fresh schemes.

However, the prime minister at that time removed the restriction on new schemes in an apparent bid to please parliamentarians, who used them as a tool to win votes in their constituencies. The same episode is being repeated now.

Briefing the NA committee, Petroleum Secretary Abid Saeed said the prime minister had lifted the ban on new gas schemes, the financing for which would come through an increase in tariffs.

He said the Prime Minister’s Office had given the go-ahead for the completion of projects, which had already been on the halfway mark. Ogra too has given approval in this respect.

CNG stations

Committee members also took up the issue of liquefied natural gas (LNG) import and noted that the first LNG terminal would start operating in the first quarter of 2015.

Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi told the panel that the government would not be in a position to provide natural gas to compressed natural gas (CNG) stations in Punjab from next year. “The filling stations will switch to LNG to keep running their business.”

The minister pointed out that the CNG sector had been permitted to use imported LNG and if it wanted to bring the commodity from January next year it would be allowed to do so.

“We will try to facilitate the CNG stations and the fuel will remain 35% cheaper than petrol,” he said.

At present, the government is encountering problems in meeting the needs of domestic gas consumers as with the arrival of winter the demand has increased sharply.

Abbasi said they had started supplying electricity to industrial units as they had not been able to keep providing gas to Punjab industries because of shortage.

In an attempt to utilise gas in electricity production, the government has allowed installation of power plants at the mouth of 46 gas fields, which would increase power production by 1,000 megawatts.

The management of Sui Southern Gas Company (SSGC) said the Supreme Court had declared its Implementation Agreement dated August 12, 2003 with Jamshoro Joint Venture Limited (JJVL) as “null and void” in its judgment on December 4, 2013.

However, legal advisers suggested that until a permanent mechanism for the operation of the plant (to ensure continuous supply of liquefied petroleum gas to end-consumers) was put in place, the parties may enter into an arrangement of their own, based on commercial consideration and subject to the approval of their boards.

Published in The Express Tribune, November 18^th, 2014.

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