Sindh set to challenge Wacog bill

Minister says province has first right to use indigenous gas

ISLAMABAD:

The government of Sindh is set to challenge a bill passed by the Senate to implement weighted average cost of gas (Wacog), citing that it will raise the prices of indigenous gas for the consumers of gas producing provinces.

Earlier in December 2020, the federal government held a consultative session with provinces to take them into confidence for inclusion of expensive liquefied natural gas (LNG) into the weighted average gas formula.

However, three major gas producing provinces- Khyber-Pakhtunkhwa (K-P), Sindh and Balochistan -refused to bear the burden of expensive imported gas to benefit the consumers of Punjab.

Compared to other provinces, Punjab has lower gas production while its consumption is massive. With a huge population, the province mainly depends on imported gas to fulfill its fuel needs amid scarcity of local gas.

During the consultative session, the federal government tabled three proposals before the provinces.

Under the first one, it asked the provinces to include LNG in the weighted average price of gas to recover full cost. The second option suggested that full cost of gas should be recovered from those consumers who were using RLNG.

Under the third recommendation, the government stated that RLNG consumers should be cross-subsidised.

At that time, all three proposals were turned down by the gas producing provinces of Pakistan. Citing that they had the first right to use the gas under article 158, they made it clear that they could not bear the burden of other provinces.

After facing resistance from the provincial leaderships, the federal government decided to implement the weighted average cost of gas by introducing a bill in the parliament.

On Thursday, both upper and lower houses of the parliament approved a bill to introduce the weighted average cost of gas. This would lift the prices of the fuel for consumers using indigenous gas in the gas producing provinces of the country.

In recent months, the price of imported gas rose to as high as $30 per mmbtu which also impacted the rates of indigenous gas.

“We will discuss the matter with the cabinet,” Sindh Minister for Energy Imtiaz Ahmed Shaikh told The Express Tribune. He said that the provincial government would also approach the court to highlight the issue.

According to him, Sindh had the first right to use its own gas as per article 158 and the federal government had could not include it in the weighted average cost of gas.

“Why should Sindh bear the burden of imported gas,” the minister questioned.

He further termed the approval of the bill a conspiracy which would fuel tensions between the federation and the provinces.

He also said that the policies of the Pakistan Tehreek-e-Insaf government were becoming a threat to the federation.

In a statement, Shaikh said that the new bill will obligate the gas producing areas of the country to pay the same price for natural gas as non-producing ones.

“Approval of the controversial bill cannot avert the ongoing gas crisis in the country and the government is creating a hostile situation between the provinces,” he said. “Instead of resolving the gas crisis, the centre is fueling tensions between the provinces.”

He stressed that if tenders for LNG were issued timely, the country would not have faced such a major crisis.

Published in The Express Tribune, February 20^th, 2022.

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