Govt plans surcharge on gas consumers

Move aimed at recovering cost of re-gasified liquefied natural gas

ISLAMABAD:

The government has planned to impose a surcharge on gas consumers to recover the cost of re-gasified liquefied natural gas (RLNG), announced Special Assistant to Prime Minister on Petroleum Nadeem Babar.

Speaking at a press conference on Wednesday, Babar revealed that gas companies had requested the federal government to devise a proper mechanism for sale of RLNG to domestic and commercial consumers.

He pointed out that RLNG was defined as a petroleum product in the Oil and Gas Regulatory Authority (Ogra) Ordinance through an Act of parliament. “Former minister for petroleum Shahid Khaqan Abbasi introduced RLNG as a petroleum product in 2016, which needs to be redefined as gas again through an Act of parliament,” he added.

He said the Economic Coordination Committee’s (ECC) approval would be sought for a price mechanism and later it would be sent to the federal cabinet for approval.

Referring to the recent shortage of gas in Karachi, Babar said the Sindh government had not informed the Centre about the decision taken in a cabinet meeting on the Right of Way for laying a 17km gas pipeline from Pakland to the Sui Southern Gas Company (SSGC) network.

“We have already completed work on 12 km of the proposed pipeline and are awaiting approval for the Right of Way to lay the remaining 5km pipeline,” he added.

Babar said out of the requirement of 1,200 million cubic feet of gas per day (mmcfd) in Sindh, 900 mmcfd was utilised by Karachi alone.

In case the provincial government allowed the laying of the pipeline, the federal government would complete it by the third week of December to bridge the gas shortfall by pumping additional RLNG.

He said the province was getting 970 mmcfd from its own production and there was a shortfall of 70 mmcfd, which would be met through RLNG.

The PM aide underlined that on the request of industries in Karachi, the federal government was providing them with gas at a tariff of Rs930 per million British thermal units under a five-month (October-February 2021) arrangement.

“From March-April onwards, they will receive gas from SSGC’s system at previous rates,” he said.

In response to a question, Babar pointed out that the cost of North-South Gas Pipeline had been revised upwards by changing its route and diameter. Pipeline on the new route between Karachi and Lahore will be around 1,700 km long and its diameter will be 48 to 56 inches. Its transmission capacity was also enhanced from 1 to 1.6 billion cubic feet (bcf), he said.

The pipeline will have the capacity to enhance gas supply up to 2 bcf keeping in view the future needs, which can reach up to 3 bcf in the next 10 years.

Pakistan has nominated a technical committee and is awaiting announcement of Russia’s technical team so that the design and Right of Way of the proposed pipeline could be discussed.

“The government is compelled to show progress on the proposed pipeline till February 2021 in line with a directive of the Supreme Court in the gas infrastructure development cess case,” he said.

The PM aide disclosed that the Petroleum Division would forward a proposal to the Cabinet Committee on Energy (CCOE) on Thursday for the unbundling of Sui Northern Gas Pipelines Limited (SNGPL) and SSGC. In the first phase, the division proposed to separate transmission and distribution business of the gas companies. Later, he said, the job of gas distribution would be given to small gas companies.

Talking about the policy structure for fuel quality, Babar said Euro-V grade petrol had already been introduced from September 1.

“However, 60% of the consumption of diesel, which refineries produce, should be of Euro-V standard by January 1, 2021,” he said. “The government and refineries have agreed on most of the points under the new policy structure for upgrading and a draft will be submitted to the federal cabinet for approval within one month.”

Published in The Express Tribune, October 15^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.