Bid foiled: Ministry’s plan to increase gas prices by 30% thwarted
The petroleum ministry had planned to bring LPG-Air Mix project into full swing by increasing gas prices by 30% even for those consumers who would not be using it.
Officials familiar with the matter told The Express Tribune that the Economic Coordination Committee (ECC) in its meeting a few days earlier was reviewing the LPG-Air Mix project tabled by Ministry of Petroleum when Ogra authorities pointed out that it would cause hike in gas prices by 30% and in return inject a mere 200 million cubic feet gas per day (mmcfd) into the system.
ECC formed a committee to examine the impact of this project after Ogra authorities pointed out financial impact on gas consumers including household users who will not even be using it.
Officials familiar with the matter termed the plan as favouritism by the petroleum ministry towards LPG companies.
The project aims to inject LPG Air-Mix at various points in the pipelines of both Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited to help overcome the crisis.
Gas companies have sought a subsidy of Rs6 billion for LPG-Air Mix plants to be recovered from gas consumers in a petition submitted to Ogra to set up LPG Air Mix plant from July 1, 2012.
Finance minister Abdul Hafeez Shaikh and other members of the ECC also strongly expressed concern over capital cost of the project.
It was noticed that consumers could use LPG cylinders instead of LPG-Air Mix plant that would burden the masses. Secretaries of Economic Affairs Division (EAD) and Finance also supported Ogra’s view point.
Ogra authorities further said that project also lead to a monopoly of LPG companies in the country.
In a summary tabled before ECC, the petroleum ministry proposed to approve the guidelines allowing Oil and Gas Regulatory Authority (Ogra) to include the cost of LPG air mix in the uniform cost of gas formula.
According to a plan worked out by the ministry, the weighted average cost of the gas is expected to increase 1.57% to Rs313.79 per Million British Thermal Unit (mmbtu) if 10 million cubic feet of gas per day (MMCFD) of LPG air mix is injected into the system.
The cost will rise 7.73% in case of 50 mmcfd LPG air mix injection, 15.21% in case of 100 mmcfd injections and 29.49% to Rs400.05 per mmbtu in case of 200 mmcfd injection of LPG air mix.
Published in The Express Tribune, April 19th, 2012.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ