Labelled ‘petroleum product’: LNG prices to be revised every month, says ECC

Bengali terms decision ‘unconstitutional’; bailout package for PSM approved.


Our Correspondent April 23, 2015
Bengali terms decision ‘unconstitutional’; bailout package for PSM approved. PHOTO: REUTERS

ISLAMABAD:


In a move that will certainly invite criticism and has been labelled as violation of the constitution, the federal government decided on Thursday to treat imported Liquefied Natural Gas (LNG) as a “petroleum product” instead of gas.


The move is aimed at fixing its price on a monthly basis — a pattern followed by petroleum products.

The Economic Coordination Committee (ECC) of the Cabinet took the decision in response to an objection raised by the Oil and Gas Regulatory Authority (Ogra) that had refused to fix LNG prices on a monthly basis. Under the regulatory framework, gas prices are fixed bi-annually, while prices of petroleum products are subject to monthly revision.

The federal government wants to review LNG prices every month in an attempt to pass on the fluctuation in prices in international markets to consumers.

To declare the LNG as a petroleum product, the ECC approved amendments in the Schedule of the Petroleum Products Ordinance of 1961, according to a handout issued by the Finance Ministry after the ECC meeting. It added that the Committee comprising Finance Secretary, Petroleum & Natural Resources secretary, Secretary Law and Member Gas Ogra proposed the changes.

Kaiser Bengali opposes move

Meanwhile, renowned economist Dr Kaiser Bengali, Balochistan-nominated member of the 9th National Finance Commission as well, said the ECC had no jurisdictional ground over the decision.

“The decision is in violation of the constitution and the federal government has been constantly distorting Article 172 (3) of the Constitution,” said Dr Bengali.

He said any decision that pertains to natural gas could only be taken by the Council of Common Interests having representation of the federation and the federating units, adding that the ECC did not have constitutional powers to reach to such a decision.

The case of PSM

Meanwhile, the ECC approved yet another injection of Rs1 billion in Pakistan Steel Mills in order to pay two-month salaries to employees. This comes as the new management has failed to revive the entity despite availing bailouts amounting to Rs20 billion in the last one year.

The ECC took the decision on the proposal put forth by the Privatisation Commission. It was also decided that the revised realistic operational plan of PSM, containing the precise funding requirement would also be presented to the ECC after the PSM Board duly recommended it. The ECC was informed that the PSM has been unable to increase its production to 70% of the total capacity, seeking a three-month extension in meeting the level. At present, the PSM is running below 50% of its capacity.

The PSM has been unable to pay salaries despite having Rs9 billion in inventories. Finance Ministry officials have also alleged that some senior management members were involved in shabby deals to keep the country’s largest industrial unit financially unviable.

The ECC also approved the import of 100,000 tons of fertiliser for Kharif season 2015 (April-September) and enhanced imported supply of around 82,000 tons under the Saudi Arabia financing facility within the earlier allocated amount. It allowed agreement between the Economic Affairs Division and Saudi Arabia’s fertiliser manufacturer in order to ensure timely arrival of the fertiliser.

The ECC also approved in principle the signing of the Master Agreement and Power Purchase Agreement of CASA-1000 Project subject to approval by the Central Development Working Party.

The ECC also allowed the export of wheat on a government-to-government basis at subsidised rates.

Published in The Express Tribune, April 24th,  2015.

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