Dar rules out change in CCI decision on gas supply

CCI allows increase in gas allocation to third parties up to 35%

ISLAMABAD:

Deputy Prime Minister Ishaq Dar, who is also chairman of a committee on gas supply issues, has told the Petroleum Division that no change would be made in the decision of the Council of Common Interests (CCI), which has allowed an increase in gas allocation to third parties by exploration and production (E&P) companies.

Earlier, Prime Minister Shehbaz Sharif held a meeting, attended by E&P companies, which discussed concerns over delay in implementation of the CCI decision to enhance gas allocation to third parties from 10% to 35%. During the huddle, the companies pledged new investment of $6 billion, but they linked it with the increase in gas allocation to third parties.

The decision on increase in allocation was taken by the previous caretaker government in an attempt to open the gas sector and curb circular debt, which had mounted to Rs2.2 trillion. However, Petroleum Minister Musadik Malik expressed reservations about the caretaker government's move, prompting concerns among exploration companies. To address their fears, the premier constituted a committee, headed by Ishaq Dar.

Meanwhile, the Petroleum Division prepared a framework for approval by the Executive Committee of the National Economic Council (Ecnec) with such provisions that could jeopardise billions of dollars in investment from national and international companies in the E&P sector.

According to the framework, E&P companies can offer up to 35% of discovered gas for third-party sale, but they can do so in a phased manner over several years.

According to the proposal, in financial year 2024-25, the gas allocation can be increased up to 15%, in FY26 up to 20%, in FY27, FY28 and FY29 up to 25%, in FY30 up to 30% and in FY31 up to 35%.

Sources said the committee held a meeting recently, which was attended by Petroleum Division officials, the petroleum minister and representatives of oil companies.

Committee Chairman Ishaq Dar cautioned that there would be no change in the CCI decision on enhancing gas allocation. The decision would be implemented in the same spirit as the government wanted to open the gas sector to attract investment, he said.

Petroleum companies emphasised that implementation of the CCI decision would ease the burden of circular debt on the government. Consequently, the gas sector will become independent, perform well and stimulate more investment.

They added that E&P companies were facing cash-flow challenges due to the circular debt that had swelled to Rs2.2 trillion, which was also hampering fresh investment.

Sources said the issue of low bill recoveries by the public gas utilities was also taken up for discussion during the meeting.

It was informed that they were recovering 40% of bills whereas 60% of recoveries faced delays as the utilities failed to dispatch bills to different sectors on time.