Sindh demands its share in gas infrastructure cess
Centre appears to have spent entire amount on budget financing
Centre appears to have spent entire amount on budget financing. PHOTO: FILE
ISLAMABAD:
The government of Sindh has protested the misuse of gas infrastructure development cess (GIDC), which is being collected from consumers since January 2012 to finance gas import projects, and has asked the central government to transfer the province’s share in receipts.
The Ministry of Finance appears to have spent the entire amount to bridge the budget shortfall, which has upset gas-producing provinces, particularly Sindh that has demanded its share according to the contribution of the province to total gas production, say officials familiar with the development.
Sindh is a major gas-producing province accounting for 70% of production in the country. The federal government is collecting GIDC on gas consumption and petroleum levy on sale of petroleum products, which are federal taxes that are not part of the divisible pool.
However, when reports emerged that the federal government had not spent the money on the required projects, Sindh pressed the centre to transfer its share of the tax.
The federal government, according to officials, has given assurances that the money will be spent on the planned gas pipeline projects.
The Ministry of Petroleum and Natural Resources has approached the finance ministry for the release of GIDC for spending on such projects. So far, the government has received Rs183.86 billion in GIDC.
For laying a liquefied natural gas (LNG) pipeline from Gwadar, the government is negotiating a commercial deal with a Chinese company for kicking off work by the end of March.
The company, China Petroleum Pipeline Bureau selected by the Chinese government, will provide 85% of financing whereas Pakistan will inject 15% equity into the project.
The company is already working on pipeline projects stretching over 8,000 km in different countries including Myanmar, Bangladesh, Russia and other nations. It has also laid pipelines from Turkmenistan to China.
Owing to delay in financial assistance, the petroleum ministry may not be able to complete gas pipeline projects in the stipulated time frame. The finance ministry insists that the government needs to frame cess rules and before that it could not release the funds.
The petroleum ministry has planned to send a summary to the Economic Coordination Committee for making available necessary funds to finance the Gwadar LNG pipeline.
According to the officials, it is unfortunate that funds are available for Metro bus projects but there is no money for pushing ahead with gas import plans, which will contribute immensely to accelerating the pace of economic growth that suffers a three-percentage-point loss every year due to energy shortages.
Under the plan, the LNG pipeline will be laid from Gwadar to Nawabshah and a terminal will also be built at Gwadar Port. The pipeline will be connected to the Iranian border at a cost of $200 million.
The Chinese firm will build a new terminal - a floating storage and re-gasification unit (FSRU) - which will be owned by Inter State Gas Systems - a company established by the government that works on gas import projects.
Published in The Express Tribune, February 12th, 2016.
The government of Sindh has protested the misuse of gas infrastructure development cess (GIDC), which is being collected from consumers since January 2012 to finance gas import projects, and has asked the central government to transfer the province’s share in receipts.
The Ministry of Finance appears to have spent the entire amount to bridge the budget shortfall, which has upset gas-producing provinces, particularly Sindh that has demanded its share according to the contribution of the province to total gas production, say officials familiar with the development.
Sindh is a major gas-producing province accounting for 70% of production in the country. The federal government is collecting GIDC on gas consumption and petroleum levy on sale of petroleum products, which are federal taxes that are not part of the divisible pool.
However, when reports emerged that the federal government had not spent the money on the required projects, Sindh pressed the centre to transfer its share of the tax.
The federal government, according to officials, has given assurances that the money will be spent on the planned gas pipeline projects.
The Ministry of Petroleum and Natural Resources has approached the finance ministry for the release of GIDC for spending on such projects. So far, the government has received Rs183.86 billion in GIDC.
For laying a liquefied natural gas (LNG) pipeline from Gwadar, the government is negotiating a commercial deal with a Chinese company for kicking off work by the end of March.
The company, China Petroleum Pipeline Bureau selected by the Chinese government, will provide 85% of financing whereas Pakistan will inject 15% equity into the project.
The company is already working on pipeline projects stretching over 8,000 km in different countries including Myanmar, Bangladesh, Russia and other nations. It has also laid pipelines from Turkmenistan to China.
Owing to delay in financial assistance, the petroleum ministry may not be able to complete gas pipeline projects in the stipulated time frame. The finance ministry insists that the government needs to frame cess rules and before that it could not release the funds.
The petroleum ministry has planned to send a summary to the Economic Coordination Committee for making available necessary funds to finance the Gwadar LNG pipeline.
According to the officials, it is unfortunate that funds are available for Metro bus projects but there is no money for pushing ahead with gas import plans, which will contribute immensely to accelerating the pace of economic growth that suffers a three-percentage-point loss every year due to energy shortages.
Under the plan, the LNG pipeline will be laid from Gwadar to Nawabshah and a terminal will also be built at Gwadar Port. The pipeline will be connected to the Iranian border at a cost of $200 million.
The Chinese firm will build a new terminal - a floating storage and re-gasification unit (FSRU) - which will be owned by Inter State Gas Systems - a company established by the government that works on gas import projects.
Published in The Express Tribune, February 12th, 2016.