PM aide says no need for further hike in gas prices

Claims increasing gas rates was never a demand of IMF

LAHORE: There is no need to increase gas prices further as recent hike is enough for gas companies to meet their operational expenditures, said Adviser to Prime Minister on Petroleum Nadeem Babar.

Talking to media in a press conference on Friday, he said that since Liquefied Natural Gas (LNG) was being used to meet the shortfall, there was a possibility that in future, a rate hike in LNG would affect the price mechanism.

“Imported gas is linked with global price fluctuations so any hike in future LNG prices may affect local gas prices too,” he said. “Previous LNG deals with Qatar have been signed, but for future contracts we are in talks with concerned authorities to provide gas on deferred payments, their rates will be much better than previous deals.”

The adviser said that the IMF never demanded the government to increase gas prices.

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“It only asked us to provide details of the cost and how to recover that cost as circular debt in both gas companies accumulated to Rs168 billion as of June 2018,” he said.

He was of the view that it was necessary for Pakistan to increase its gas resources to keep prices in control.

“In the past five and a half years, not a single tender of drilling was floated,” he lamented. “In our tenure, we have floated tenders for five blocks and will open up another 35 blocks in a year’s time.”

He further said that the government has consulted with concerned companies regarding the difficulties they face while obtaining and executing drilling tenders.  He revealed that the department has identified six changes and amendments would be made soon to streamline the gas drilling process.

Regarding new LNG terminals, he lauded that at least five global companies were interested in establishing new LNG terminals and the government was looking for four new RLNG terminals out of which three would be in Karachi and one would be in Balochistan.

“The companies and their local partners will be responsible for the entire supply chain for the new terminals as the government doesn’t want get involved in this business.”

Babar informed that currently, two RLNG terminals were operating at full capacity and the leadership was making arrangements for upcoming winter season so gas supply to industries and domestic consumer would not be interrupted.

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He claimed that the government succeeded in reducing unaccounted for gas (UFG) losses for industrial sector within Sui Northern Gas Pipelines Limited (SNGPL) network to 1.5%.

“There are around 425,000 industrial meters in SNGPL’s network and it was easy to monitor these meters initially because the number of domestic meters was 6.5 million,” he said. He claimed that still 95% of domestic consumers were getting subsidised rate on gas.

“This is 16% of the actual amount of gas and consumers will pay this price as long as they fall under this particular slab,” he said. “However when they exceeds the limit, they will be charged extra only for that particular slab.”

He informed that the remaining 5% consumers could pay extra charges to consume as much gas as they wanted to so they would know that natural gas was not a cheap commodity.

Published in The Express Tribune, July 6^th, 2019.

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