ECC puts off decision on Rs175b borrowing for RLNG pipeline

Approves sale of environment-friendly Euro-IV and Euro-V diesel in Pakistan

Shahbaz Rana August 30, 2017
An aerial view of the Haveli Bahadur Shah LNG power plant in Jhang, Pakistan July 7, 2017. PHOTO: REUTERS

ISLAMABAD: The federal government on Tuesday put off approval for a commercial loan of Rs175.5 billion required for laying the third re-gasified liquefied natural gas (RLNG) pipeline from Karachi to Lahore as some ministries were not in favour of borrowing due to availability of Rs260 billion worth of gas infrastructure development cess (GIDC).

Headed by Prime Minister Shahid Khaqan Abbasi, the Economic Coordination Committee (ECC) of the cabinet constituted a committee that would draw up plan for securing Rs175.5 billion for construction of the RLNG-III pipeline with capacity of 1.2 billion cubic feet per day (bcfd).

The ECC approved the introduction of environment-friendly Euro-IV and Euro-V high-speed diesel in Pakistan. The Euro-IV grade will be expensive by Rs1.41 per litre against the currently marketed Euro-II diesel. Euro-V will be expensive by Rs2.43 per litre.

SNGPL gives green light to Karachi-Lahore LNG pipeline

The ECC also approved an increase of Rs2 per kg in wheat price for Gilgit-Baltistan from the next fiscal year and gave the go-ahead for a subsidy of Rs2 per kg for the current year.

RLNG pipeline

In order to supply an additional 1.2 bcfd, the two public gas utilities have been tasked with completing the third LNG pipeline before October next year.

The Petroleum Division, headed by the PM himself, placed a summary before the ECC to either provide Rs175.5 billion from the GIDC or arrange a commercial loan at minimum interest rate.

Preference was given to financing the pipeline from the GIDC, which had been levied primarily to build gas infrastructure.

However, the Ministry of Finance was not in favour of heavily sharing the GIDC collection due to its implications for the budget, officials said. It proposed that Rs25 billion could be given from the GIDC and remaining Rs150 billion could be arranged from commercial banks.

Owing to the difference of opinion, Finance Minister Ishaq Dar requested the PM to constitute a committee, said the officials.

In a similar case, the ECC had approved bank borrowing of Rs101 billion for the LNG-II pipeline despite availability of GIDC funds.

A week before becoming the prime minister on August 1, Abbasi informed the Senate Standing Committee on Finance that Rs258.8 billion had been collected in GIDC from various stakeholders.

Other decisions

The ECC approved a Petroleum Division’s proposal for allocation of 14.2 mmcfd of gas from the Sofia field to Sui Southern Gas Company (SSGC) due to availability of the nearest transmission network and the gas from the same block was already being supplied to SSGC.

Govt to provide guarantees for LNG pipeline financing

The ECC also gave approval for changing the location of four liquefied petroleum gas (LPG) air-mix plants keeping in view the road access, land availability and security measures.

Air-mix project Malkot (Khyber-Pakhtunkhwa) is proposed to be replaced with a project at Balakot, Forward Kahuta with Drosh (Chitral), Hajira (Azad Jammu and Kashmir) with Beor (Kahuta tehsil) and Abbaspur (AJK) with Ban (Murree tehsil).

The ECC approved another proposal of the Petroleum Division to re-allocate up to 130 mmcfd of gas from Oil and Gas Development Company’s Kunnar-Pasakhi Deep field to SSGC and Sui Northern Gas Pipelines on an equal sharing basis.

It was also decided that up to 25 mmcfd from MOL’s Makori East field and 6.4 mmcfd from the Makori Deep field would be allocated to SNGPL for meeting demand.

The ECC allowed the marketing of Euro-IV and Euro-V high-speed diesel under the deregulated environment provided there was no burden on the government.

The existing Euro-II grade, introduced in January this year, would also remain in the market.

It was revealed that two oil refineries - Byco and Pakistan Refinery - were still selling low-quality diesel despite the introduction of Euro-II.

The ECC kept subsidised wheat price unchanged at Rs12 per kg against the cost of Rs51 per kg for the consumers of Gilgit-Baltistan. However, the price will be increased by Rs2 from the next fiscal year.

The ECC decided that funds for wheat supply would be provided on a quarterly basis during harsh weather while for the remaining part of the year they would be provided on a monthly basis.

The ECC gave the go-ahead for payment of April-May salaries to the employees of Pakistan Steel Mills.

Published in The Express Tribune, August 30th, 2017.

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