Ministry wants more: ECC allows 13 per cent increase in gas prices for fertiliser plants

Some ministers oppose rise in fuel prices for fertiliser manufacturers, CNG outlets.

ISLAMABAD:

The Economic Coordination Committee (ECC) of the cabinet has quietly given the go-ahead to the Ministry of Petroleum and Natural Resources to increase gas price by 13.15 per cent for fertiliser manufacturers with immediate effect.

The ministry had proposed an increase of 100 per cent in gas price for fertiliser plants effective from July 1, 2011. However, ECC accorded approval for an increase of 13.15 per cent which was worked out by the Oil and Gas Regulatory Authority (Ogra) and directed the petroleum ministry to seek approval either from the prime minister or cabinet for the 100 per cent increase.

The ministry had sought ECC’s approval for increasing gas tariff from 10 to 15 per cent for domestic consumers, 15 to 20 per cent for commercial and industrial consumers and 100 per cent for fertiliser manufacturers. It had also proposed taking prices of Compressed Natural Gas (CNG) to 65 per cent of petrol price. At present, CNG price stands at 50 per cent of petrol price.

Sources said during the meeting of ECC on Thursday, some ministers opposed the increase in gas prices for CNG outlets and fertiliser plants.

Fertiliser factories are paying Rs59.28 to Rs102.01 per million British thermal unit (mmbtu) for gas being used as feedstock in Sui Northern Gas Pipelines Limited’s (SNGPL) system. Commercial consumers are paying Rs563.76 per mmbtu, CNG Rs503.63 per mmbtu, industrial consumers Rs382.37 per mmbtu and power plants Rs332.36 to Rs980.61 per mmbtu.

“The petroleum ministry wants to end distortion in gas prices and ECC has in principle agreed to this by approving the increase in prices,” an official said, adding, however, the issue would be taken up with the prime minister and cabinet for a formal approval.

“If power plants and other consumers are paying higher prices for gas, then why fertiliser manufacturers should not pay the same price,” the official said, adding the idea behind the increase in gas price for fertiliser units by 100 per cent was to bring it on a par with prices paid by other consumers.

Sources stressed that old fertiliser plants had benefited much from cheaper gas supply and the subsidy could not continue for long as different sectors, particularly textile, were protesting against the concession.



Published in The Express Tribune, July 2^nd, 2011.