Rs1,500b circular debt of gas firms, Senate panel told

Petroleum Division officials suggest increasing prices to address problem

ISLAMABAD:

The Senate Standing Committee on Petroleum was informed that the circular debt of gas companies had reached Rs1,500 billion, a problem, the Petroleum Division officials said, could only be solved by increasing gas prices in the country.

“Increase in gas prices has become inevitable in the country to address the problem of gas shortage and revolving credit,” the officials informed a meeting of the Senate standing committee held under the chairmanship of Senator Muhammad Abdul Qadir at the Parliament House on Monday.

The meeting was attended by Senator Fida Muhammad, Senator Rukhsana Zubair, Senator Afnanullah Khan, Senator Shamim Afridi, Senator Saifullah Abro, Minister of State for Petroleum Senator Musaddiq Malik, Ministry of Petroleum secretary, Ogra Chairman Masroor Khan, Karachi Chamber of Commerce and Industry and Sui Southern Gas Company officials as well as other senior officials.

Minister of State for Petroleum Senator Musaddiq Malik assured the committee that any decision regarding increase in gas prices would be taken in consultation with parliament.

Committee Chairman Senator Qadir inquired about the criteria for fixing gas prices and its distribution.

He was of the view that domestic consumers should be given top priority in this regard.

Domestic consumers should be charged cheaper rates as compared to industrial units, Senator Qadir said, suggesting that in order to reduce the burden on the government, the CNG sector should be allowed to import gas on its own.

He stressed that distribution of gas should be given priority in terms of sector, saying that direct subsidy to the fertiliser industry was not sustainable.

Senator Qadir expressed concern over the rising circular debt which was currently Rs1,500 billion, stressing the need to find a permanent solution to the recurring problem.

The committee also considered issues related to the supply of gas to the KCCI.

KCCI President Muhammad Idrees apprised the committee of the grievances of the industrialists, including the non-availability of gas to the industrial sector for the last four months.

Idrees said that Sui Southern Gas Company has not been supplying gas to Karachi industries for five months.

“Secretary Sahib came to Karachi and agreed with what we said. Secretary Sahib agrees but does not implement.”

Petroleum Secretary Ali Raza Bhatta got up and left the meeting, saying that he had an important meeting to attend to and could not wait.

The KCCI delegation expressed frustration over the secretary’s departure.

The committee chairman said that the state minister was present in the meeting.

Qadir requested State Minister Malik to address the concerns of Karachi industrialists and come up with appropriate solutions.

The committee also discussed the relevant rules for allowing the oil marketing companies to add high octane blending component (HOBC97).

Senator Malik told the committee that the ministry regulated only those products which were widely used by the people like RON92 and HOBC97 which did not fall in this category.

Senator Qadir advised the ministry to at least check the authenticity of the new product.

Admitting that former energy minister must have written a letter to buy oil from Russia, Senator Malik clarified that Pakistan had not entered into any agreement with Russia for the purpose.

Ogra Chairman Masroor Khan said that non-increase in gas price increased pressure on companies.

The committee chairman said that the combined circular debt of power and gas sectors had reached close to Rs4,000 billion.

“How will the country's economy function in such a situation?”

The committee considered a public petition on the issue of meter tampering and overbilling, which was referred to by the Senate chairman.

The committee chairman said that independent third party services should be sought which would help the authority in detecting theft through scientific methods.