The CCI decided that the expenditure made on the provision of gas to localities within 5km radius of the gas producing fields would be borne by the distribution companies. PHOTO: REUTERS
Consequently, the central and provincial governments have agreed to pass billions of rupees worth of cost on to gas consumers with an upward revision in the tariff.
Talking to The Express Tribune, sources revealed that the issue was taken up by the Council of Common Interests (CCI) - an inter-provincial body - in a meeting last month, chaired by Prime Minister Shahid Khaqan Abbasi and attended by chief ministers of all the provinces.
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Punjab government backed the proposal that the consumer cost criteria should be revised before discussing cost-sharing with the provinces in order to collect the entire cost from the consumers.
Earlier, the Petroleum Division had found it almost impossible to undertake such gas supply projects for the villages and localities falling within 5km radius of the gas fields because of a dearth of funds.
Gas producing companies were also encountering problems in the exploration work and gas theft was on the rise near the producing fields, especially in Khyber-Pakhtunkhwa (K-P).
Sources said the CCI decided that the expenditure made on the provision of gas to localities within 5km radius of the gas producing fields would be borne by the distribution companies.
In the case of Balochistan, if no village is located within the 5km radius, gas will be supplied to the nearest tehsil and district headquarters.
It was also decided that the cost going above the criteria would also be borne by the gas utilities which would then be recovered through consumer tariff adjustment. This, however, will apply only to the localities and villages situated near the gas producing fields.
The CCI agreed that the current consumer cost spectrum, which was Rs54,000 for Sindh, Rs108,000 for Punjab and Rs270,000 for K-P and Balochistan, would be revised keeping in view the inflation and other relevant factors.
In this regard, the provincial governments would submit their proposals to the Petroleum Division for preparation of a consolidated report for consideration of the CCI.
All four provinces refused to foot the bill of new gas supply schemes planned near the producing fields and asked the federal government to release the entire financing.
The move came after the federal government stopped fund allocation under the Public Sector Development Programme (PSDP) for fresh gas schemes.
The Sindh government argued that the federal government may bear the entire cost whereas Balochistan and K-P suggested that gas utilities should bear the cost. However, it would depend on approval of the Oil and Gas Regulatory Authority.
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The Petroleum Division suggested that the utilities would try to provide gas from their system to the villages and localities near producing fields where reserves had been exhausted.
It also proposed that the cost of legalising the illegal network in K-P could be shared between the province and the centre. However, the province did not agree.
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.
Published in The Express Tribune, December 22nd, 2017.
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