Petroleum Division seeks Rs5.17b in RLNG subsidy

Finance Division could not release amount for March-June FY19

ISLAMABAD: The Petroleum Division has approached the Economic Coordination Committee (ECC), seeking approval for the release of Rs5.17 billion on account of imported gas supply at a discounted rate to major export-focused sectors.

In the last fiscal year, the government had approved Rs25 billion in supplementary grant for the key export sectors on account of re-gasified liquefied natural gas (RLNG) supply at the concessionary rate of $6.5 per million British thermal units (mmbtu).

However, the Finance Division could not release Rs5.17 billion for the months of March, April, May and June 2019 by the close of last fiscal year. Therefore, the subsidy amount was surrendered to the Accountant General of Pakistan Revenue (AGPR).

A senior government official told The Express Tribune that the cabinet, in its meeting held on December 6, 2018, had approved a budgetary allocation of Rs25.7 billion in supplementary grant for disbursement to the export-oriented sectors - also known as zero-rated sectors - and their captive power units on a monthly basis.



So far, the subsidy amounting to Rs10.7 billion covering the period October 16, 2018 to February 28, 2019 has been released to Sui Northern Gas Pipelines Limited (SNGPL) based on monthly verified bills and claims out of the budgetary allocation.

The claim for March 2019 amounting to Rs2.54 billion was based on the supply of 100% RLNG instead of the 50:50 blend of RLNG and system gas, as approved by the ECC.

The Finance Division, in its letter on May 24, 2019, pushed down the original allocation of Rs25.7 billion to Rs16.9 billion. Subsidy claims for April 2019 amounting to Rs791 million and for May 2019 amounting to Rs886 million could not be paid by the Finance Division by the close of last fiscal year. For June 2019, the subsidy claim of Rs948 million had been received.

As per the demand of the Petroleum Division, the Finance Division has budgeted Rs24 billion in subsidy for the export-focused sectors in the current fiscal year.

The Petroleum Division has approached the ECC, seeking the release of subsidy claims for March (based on 100% RLNG), April, May and June amounting to Rs5.17 billion out of the budgeted allocation for the current fiscal year. Any resultant shortfall in the allocation at a subsequent stage should be met through a supplementary grant, it said.

“The ECC is likely to approve the request in its next meeting,” the official added.

Published in The Express Tribune, July 28^th, 2019.

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