ISLAMABAD:
There is little gas in the country, the petroleum minister told parliamentarians a few days ago – and now the little that there is, will cost a lot more starting January 1, 2012.
The petroleum ministry finalised a summary of hikes in gas prices on Wednesday, and now seeks formal approval from the prime minister, sources told The Express Tribune.
According to the summary, consumers will face a hike between 14 and 207 %, in order to generate Rs385 billion for gas utilities and import projects.
If the summary is approved, the price of Compressed Natural Gas (CNG) would rise from Rs67 per kilogramme (kg) to Rs80 per kg – a hike of Rs13 per kg.
Liquefied Petroleum Gas (LPG) will cost an additional Rs14 per kg after the imposition of Petroleum Levy worth $120 per ton on locally-produced LPG. This hike would generate Rs4 billion in additional revenue for the government in a year.
Why the hike?
The proposed major hike in gas prices is a combination of two specific charges – a 14% increase in gas prices determined by the Oil and Gas Regulatory Authority (Ogra), and the imposition of a Gas Development Surcharge (GDS) to generate funds for import projects, including the Iran-Pakistan (IP) gas pipeline.
The former, increase in gas prices, will allow the Sui Northern Gas Pipeline Limited (SNGPL) to generate Rs217 billion and Sui Southern Gas Company (SSGC) Rs148 billion in six months till June 30, 2012 to meet revenue requirement. The government would collect Rs20 billion during the six-month period through GDC to finance gas import projects like IP and TAPI.
Who pays what?
Domestic and commercial consumers, and the cement sector, will face a uniform price hike of about 14%. These consumers have been exempted from the imposition of GDS.
Industrial units will face a hike of about 17% while CNG stations in region 1 (the Potohar region, including Islamabad and Rawalpindi, Balochistan and Khyber-Pakhtunkhwa) and 2 (Sindh and remaining areas of Punjab) will face increases of about 39 and 28% respectively.
The power sector, including the Karachi Electric Supply Company, will face a 13.6% hike in gas tariff while Independent Power Producers will pay an additional 34.6%.
The highest hike, 207%, is for fertiliser plants, which presently receive gas at a highly subsidised rate of Rs102 per million British thermal units (MMBTU).
Revenue for new projects
Against requests of 30 and 14 % tariff hikes by SNGPL and SSGC respectively, Ogra recommended 14 and 11 % tariff hikes to the government for the two companies.
If approved, SNGPL will receive an extra Rs15 billion for LNG infrastructure projects and Rs10 billion for financing parliamentarians’ schemes while SSGC will get an additional Rs5 billion for new gas schemes.
Being a relatively cheaper source of fuel, gas was being wasted in different sectors, said an energy analyst. The imposition of additional charges would help avoid its wastage, the analyst added.
Another expert said the GDS would be an unnecessary burden on consumers since the IP pipeline is in doldrums due to US pressure while TAPI is still a pipedream due to its planned passage through a volatile Afghanistan.
At present, gas is supplied to the fertiliser sector at Rs102 per mmbtu, IPPs at Rs377.39 per mmbtu, industrial consumers Rs434.18 per mmbtu, power sector Rs447.14 per mmbtu and CNG stations at Rs571.88 per mmbtu.
(Read: Energy crisis)
Published in The Express Tribune, December 29th, 2011.
COMMENTS (25)
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@Pakistani:
Then the wise man will buy stock in an oil company
It is all to please the Oil Companies who are the real owners and lords of this global system. Corpratocracy ...
GUJAR KHAN: Petroleum Minister Dr Asim Hussain has announced a nationwide gas emergency and said that CNG stations would have to be shut from January 2012.... Chalo bharao petroll.....
@Zaid Hamid: yes the Indians are stealing gas, water etc etc and now they are stealing your imagination.
@Raj - USA
Relax, that's a fake Zaid Hamid account.
Enough of tax free & care free life. First you pay taxes, then you give vote then challenge the government. All of the supporters of "anti foreign assistance" politicians will soon be cooking on woods from their backyard trees. If sale of bicycles in even rich countries went through the roof, people around the world are growing their own herbs & vegetables, job losers are going back for new education in technology and health, I say what is stopping us from jumping on the wagon/bus to future.
I miss the dictator Musharraf.
@Baqar: @Zaid Hamid:
by the way folks no need to worry .. Harry potter aka Imran khan is coming to power. And you know Harry potter fix everything and he will also fix GAS problems of pakistan.
Sooner the better.. Our gas is being wasted cheaply.. And subsidize on gas benefits industrialist/corporates rather than lower price of end products.. No where in the world natural gas is used (read wasted) in domestic use and worse at such a lower price. It is used for high productivity and value added purposes like power generation, industrial plants.
Everyone need to look at this issue without emotions and just not beleive in the usual goverment bashing (which ever goverment it is).
Its high time we price the natural gas correctly to encourage more investment in gas exploration.
I have used one LPG cylinder of 11KG for more than Rs.1500 per month. Further, I have been using Gas at home for a mere monthly price of Rs. 200. which is almost like free.
it needs to enhanced for home consumers and others as well so that people use it with care considering it a precious commodity.
@Zaid Hamid: There you go !!!!!!!!!
For a moment I was very concerned if things are OK in Pakistan and why no other earlier comments blamed India.
However there is still some disappointment as you forgot the whole list of conspirators and mentioned India only.
No Gas. No Electricity. No Water. No Fertilizers. No jobs. No law-and-order.
Definitely, democracy is the biggest revenge..
Wah Pakistan Wah....
Assalam-o-Allaikum Warahmatullah.Zardari says we have completed 80% objectives in approx. 4 years and we have done in 3.5 years what the others have not done and Gillani says our main focus is the betterment and welfare of the nation.If 80% objectives' completion and nation's welfare and betterment are disguised in expensiveness then PPP's leaders are true and really working for prosperity for Pakistan's and its nation.
Its in fact a good decision keeping in view the current state of Gas outages in pakistan, first of all government had no plan how to control the spread of CNG in transport system, textile & allied industry etc, further, GAS is cheapest in Pakistan across the region, and it was also necessary to increase the price as foreign investors were reluctant to invest in this sector owing to very thin margins
If Zardari abolishes CGT and CVT on stock market, I'll vote him ;)
It maybe be bad news but it's something that should have happened some time ago. Pakistan govt has long subsidized energy prices but has run out of money and run out of sufficient supply of energy.
I am planning on a Shunn
Yes all of this may be true. Still you have to admit it does sound good and provides a way forward even if it never actually happens.
This means by June 2012 the Petroleum Minister & co. will rake billions in Corruption. GO ZARDARI GO !! Please GO!!
Revolution!
Ridiculous. This will lead to mass-scale inflation of essential goods -- from food to medicines to clothes and school texts.
What the... if the Government isn't planning to stick around why is it raising money for these projects. And why are gas consumers financing parliamentarians’ schemes? Let those billionaires finance their own schemes. And if Petroleum Minister is serious in stopping gas wastage he should start charging all govt officials for their gas bills, as this is the biggest wastage of all our resources.
This should surprise no one. This what happens where there is no rule of law and free markets.