PTI govt claims PPP govt agreed on weighted average cost of gas in Sindh

Formula includes costs of local and imported gas that will help overcome shortage

ISLAMABAD: The federal government on Monday claimed that Sindh had agreed on a weighted average cost of gas by including the imported liquefied natural gas (LNG) in a bid to overcome shortage in the country.

However, the federal government warned that Sindh would face a shortage of 300 million cubic feet of gas per day (mmcfd) if the province opposed the weighted average cost proposal, which comprises costs of locally produced gas and imported LNG.

As consumers are not willing to buy expensive imported gas, the Petroleum Division has decided to table a proposal of weighted average cost of gas in the Council of Common Interests (CCI) in an attempt to seek consent of provinces.

Sindh Chief Minister Syed Murad Ali Shah had earlier been reluctant to accept the weighted average cost formula and settle other issues pertaining to gas under Article 158 of the Constitution following the 18th Constitution Amendment.

“Sindh chief minister is almost convinced by the Petroleum Division on the much-debated gas issues in order to resolve the matter of gas distribution in Sui Southern Gas Company’s (SSGC) system,” claimed Special Assistant to Prime Minister on Petroleum Nadeem Babar, while talking to a select group of journalists on Monday.

Sindh could avoid gas shortfall in next winter by helping the federal government apply the weighted average cost formula throughout the country, Babar suggested, adding that it would also help the provincial government to consume imported LNG as new hydrocarbon discoveries in the province were on the decline.

“Sindh produces 2,360 mmcfd of gas whereas it receives 1,224 mmcfd of piped gas and about 1,346 mmcfd is dedicated to industries like fertiliser and power plants in the province,” Babar said. Babar revealed that Mari Petroleum was supplying 586 mmcfd, Oil and Gas Development Company 332 mmcfd, Sui Northern Gas Pipelines Limited (SNGPL) 234 mmcfd and Pakistan Petroleum 134 mmcfd.

He emphasised that if the trend of first right of use of provincial resources continued as claimed by the Sindh government, it would be followed by other provinces as well .

Regarding supply of re-gasified LNG to the consumers in Punjab, the special assistant said SNGPL supplied Rs19 billion worth of LNG to cover shortfall in the last winter and the consumers would be provided LNG worth Rs32 billion this year. “If the cost is not recovered from the consumers, the federal government has to bear the cost, otherwise, financial position of the gas utility will be in serious jeopardy,” he said.

Babar revealed that the energy ministry was also considering taking a proposal to the CCI for recovering the cost of RLNG, supplied in winter to the domestic consumers of SNGPL, in summer months when they got relatively low gas bills.

About permission for the Right of Way at Dhabeji from the government of Sindh, the special assistant said it would help the federal government to import an additional 100 mmcfd of LNG and improve supply to domestic consumers as well. 

Published in The Express Tribune, January 7^th, 2020.

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