‘Friends’ suggest increase in gas tariff
‘Foreign friends’ also recommended elimination of cross-subsidies to encourage optimal use of gas reserves.
ISLAMABAD:
‘Foreign friends’ have recommended an increase in gas tariffs for domestic users and the fertiliser sector by 70 to 162 per cent and elimination of cross-subsidies to encourage optimal use of the fast depleting gas reserves.
Dubbed as ‘tariff rationalisation’, the Friends of Democratic Pakistan (FoDP) proposal stipulates an increase in gas tariffs for residential users and the fertiliser sector and a reduction for cement, power generation and industry. The proposal keeps the price for commercial users and compressed natural gas (CNG) stations intact.
The recommendations have been inked in a report compiled by the energy sector task force of the FoDP.
“The government should conduct an integrated study on natural gas combining priority, price and added value, as currently the gas price is too low and used for too many purposes,” at the expense of power generation, notes the report.
On average, the proposal entails a more than 70 per cent increase in gas tariffs for domestic consumers – the donors seek to jack the existing average sale price of Rs152 per British Thermal Unit (BTU) up to Rs260.
The highest increase, however, has been proposed for the fertiliser sector (which also received the most subsidies), suggesting a 162 per cent increase.
Meanwhile, the report also suggests an average 66 per cent reduction in gas prices for the cement sector, average 16 per cent for industry and 9 per cent for power generation by cutting down cross-subsidies.
At present, the residential and fertiliser sectors are being subsidised by users in the industry, power and cement sectors.
“The Oil and Gas Regulatory Authority should rationalise gas tariffs to recover supply and distribution costs, including the cost of imported energy to meet the deficit,” reads the report.
The report puts gas shortfall in the upcoming winter at 1.4 billion cubic feet, 200 million cubic feet more than what the government claims. Given the increasing shortage, the donor body has strongly recommended a review of the existing gas load management policy by giving priority to power generation over domestic and commercial users. Due to the shortfall, Sui Northern Gas Pipelines Limited – which caters to Punjab and Khyber-Pakhtunkhwa – has announced gas outages for three days a week for industry and two days a week for CNG stations.
The FoDP priority list puts power generation at the top in terms of gas supply, followed by industry, domestic consumers, commercial users and lastly, CNG stations. At present, the government is giving priority to domestic and commercial segments.
Pakistan has also been asked to ensure fast-track implementation of the stalled Liquefied Natural Gas import project and ensure its completion by the end of next year.
FoDP has recommended an increase in indigenous gas production through infill drilling, a way to explore the gas in between wells. It also suggests exploring approximately 35 trillion cubic feet of gas trapped in hard-to-reach reservoirs.
Published in The Express Tribune, October 23rd, 2010.
‘Foreign friends’ have recommended an increase in gas tariffs for domestic users and the fertiliser sector by 70 to 162 per cent and elimination of cross-subsidies to encourage optimal use of the fast depleting gas reserves.
Dubbed as ‘tariff rationalisation’, the Friends of Democratic Pakistan (FoDP) proposal stipulates an increase in gas tariffs for residential users and the fertiliser sector and a reduction for cement, power generation and industry. The proposal keeps the price for commercial users and compressed natural gas (CNG) stations intact.
The recommendations have been inked in a report compiled by the energy sector task force of the FoDP.
“The government should conduct an integrated study on natural gas combining priority, price and added value, as currently the gas price is too low and used for too many purposes,” at the expense of power generation, notes the report.
On average, the proposal entails a more than 70 per cent increase in gas tariffs for domestic consumers – the donors seek to jack the existing average sale price of Rs152 per British Thermal Unit (BTU) up to Rs260.
The highest increase, however, has been proposed for the fertiliser sector (which also received the most subsidies), suggesting a 162 per cent increase.
Meanwhile, the report also suggests an average 66 per cent reduction in gas prices for the cement sector, average 16 per cent for industry and 9 per cent for power generation by cutting down cross-subsidies.
At present, the residential and fertiliser sectors are being subsidised by users in the industry, power and cement sectors.
“The Oil and Gas Regulatory Authority should rationalise gas tariffs to recover supply and distribution costs, including the cost of imported energy to meet the deficit,” reads the report.
The report puts gas shortfall in the upcoming winter at 1.4 billion cubic feet, 200 million cubic feet more than what the government claims. Given the increasing shortage, the donor body has strongly recommended a review of the existing gas load management policy by giving priority to power generation over domestic and commercial users. Due to the shortfall, Sui Northern Gas Pipelines Limited – which caters to Punjab and Khyber-Pakhtunkhwa – has announced gas outages for three days a week for industry and two days a week for CNG stations.
The FoDP priority list puts power generation at the top in terms of gas supply, followed by industry, domestic consumers, commercial users and lastly, CNG stations. At present, the government is giving priority to domestic and commercial segments.
Pakistan has also been asked to ensure fast-track implementation of the stalled Liquefied Natural Gas import project and ensure its completion by the end of next year.
FoDP has recommended an increase in indigenous gas production through infill drilling, a way to explore the gas in between wells. It also suggests exploring approximately 35 trillion cubic feet of gas trapped in hard-to-reach reservoirs.
Published in The Express Tribune, October 23rd, 2010.