Near producing fields: Provinces refuse to pay cost of gas supply schemes

Either federal govt or gas utilities should bear the cost

ISLAMABAD: All four provinces of the country have refused to foot the bill of new gas supply schemes planned near producing fields in order to stave off the threat of protest by local residents and have asked the federal government to release the entire capital, officials say.

The move came after the federal government stopped fund allocations under the Public Sector Development Programme (PSDP) for fresh gas supply schemes.

The Ministry of Petroleum and Natural Resources has found it impossible to undertake such projects for gas supply to the villages and localities falling within 5km radius of the producing fields because of the absence of funds.

Gas companies are also encountering problems in their exploration work and gas theft is on the rise near the producing fields, especially in Khyber-Pakhtunkhwa.

According to officials aware of the development, the petroleum ministry has written to the provinces, asking them to bear the cost over and above the funding criteria.

The Sindh government argued that the federal government may pay the entire cost whereas Balochistan and Khyber-Pakhtunkhwa suggested that the cost should be borne by gas utilities.

The government of Punjab was of the view that per-consumer cost criteria should be revised, before discussing cost-sharing with the provinces, in a bid to collect the entire cost from the consumers.

The petroleum ministry was also working on some other proposals. It pointed out that the cost may be borne by the utility companies depending on approval of the Oil and Gas Regulatory Authority (Ogra).

It said the utility companies would try to provide gas from their system to the villages and localities near producing fields where reserves had been exhausted.

The ministry also proposed that the cost of legalising the illegal network in Khyber-Pakhtunkhwa near the gas producing fields could be shared between the province and the centre. However, Khyber-Pakhtunkhwa was not ready to share the cost.

The ministry’s proposals as well as arguments of the provinces will be taken up in the Council of Common Interests - an inter-provincial body - for a decision.

At present, two public-sector gas distribution companies - Sui Northern Gas Pipelines and Sui Southern Gas Company - are supplying natural gas across the country through their extensive pipeline networks together serving millions of consumers.

These state-owned companies had been required to provide gas for various schemes under federal government directives from time to time.

Based on per-consumer cost criteria, the companies proceeded to undertake gas supply schemes with support of PSDP funds under the prime minister’s directives. In 2013, however, the federal government halted the block allocation of funds for such schemes.

Published in The Express Tribune, October 22^nd, 2016.

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