Gas supply: “Ministry revises tariff hike proposal

Increase for CNG stations reduced sharply.

Express July 29, 2011


The Ministry of Petroleum and Natural Resources has prepared a revised proposal for gas tariff hike for different categories of consumers, under which the earlier price increase for compressed natural gas (CNG) stations has been sharply reduced.

The ministry has withdrawn its earlier proposal due to stiff resistance from some ministers and has sent the new plan to the Economic Coordination Committee (ECC) for approval.

Under the revised proposal for tariff rationalisation, the ministry is seeking gas price increases in the range of 13.55 to 96.06 per cent for different categories. Though the earlier proposal was approved by ECC in June, it directed the ministry to reconsider and re-evaluate the recommendations. Sources told The Express Tribune that the ministry revised the gas tariff increase proposal following a request from Finance Minister Dr Abdul Hafeez Shaikh. “ECC is expected to approve the new proposal as the finance minister has given assurances in this regard,” an official said.

Under the revised proposal, the petroleum ministry has recommended an increase of 16.73 per cent in gas price for compressed natural gas (CNG) stations compared to earlier proposal of 69.06 per cent.

The tariff was brought down after some ministers strongly opposed the hefty increase in the ECC meeting, saying it would lead to a collapse in the CNG industry. The All Pakistan CNG Association (APCNGA) had also threatened to launch a countrywide protest and after negotiations, the petroleum ministry agreed to revise the CNG price to 55 per cent of petrol price against the earlier proposal of 65 per cent.

Under the new plan, CNG price will be increased by Rs8.05 per kg from the existing Rs59.57 to Rs67.62 in Khyber-Pakhtunkhwa, Balochistan and Potohar region (Rawalpindi, Islamabad and Gujarkhan). In Sindh and Punjab (excluding Potohar region), the price will be increased by Rs7.38 per kg from Rs56.80 to Rs64.18.

The ministry has proposed a 96.06 per cent price increase for gas being used as feedstock by old fertiliser plants in a bid to gradually reduce cross-subsidy. However, no price increase has been recommended for feedstock for new fertiliser plants.

Different proposals for increase in gas prices for other sectors including domestic, commercial, industrial and power plants have been withdrawn and the ministry has now recommended a uniform tariff increase of 13.55 per cent for these sectors, as worked out by the Oil and Gas Regulatory Authority (Ogra).

In its previous summary, the ministry had proposed a 15 per cent tariff hike for domestic consumers including bulk consumers, commercial consumers, cement sector and power plants of Water and Power Development Authority (Wapda) and Karachi Electric Supply Company (KESC).

For the industrial sector including textile mills, captive power plants and fuel stock of fertiliser plants, a tariff hike of 18.43 per cent had been recommended to equate prices with those for Wapda and KESC to bring uniformity.

Approval had also been sought for a 36.26 per cent increase in gas tariff for independent power plants (IPPs) to equate it with gas sale price of Wapda and KESC.

The ministry has also sought approval for imposing a ban on bulk meter connections for housing colonies. Furthermore, existing bulk meters at colonies will be gradually converted into standalone meters at individual premises.

Published in The Express Tribune, July 30th, 2011.


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