The Finance Division has put in jeopardy a plan to shift Rs49 billion worth of burden onto gas consumers to bail out gas distribution companies as it says the programme should not adversely affect the investigations into Ogra scandal being conducted by the National Accountability Bureau (NAB).
NAB, which had revealed in the Supreme Court a Rs82 billion mega scam in the Oil and Gas Regulatory Authority (Ogra), has now reduced its size to Rs26 billion in a reference submitted to the National Accountability Court.
Following an increase in the ceiling for Unaccounted-for-Gas (UFG), which covers theft and leakage, from 5% to 7% by Ogra, under the leadership of its former chairman Tauqeer Sadiq, the state-owned gas distribution firms earned an additional Rs49 billion, but NAB termed it a scam.
Now, the Ministry of Petroleum and Natural Resources is proposing some policy guidelines, suggesting that the burden of Rs49 billion should be passed on to gas consumers, otherwise the companies would collapse financially.
The Economic Coordination Committee (ECC), in its meeting on Friday last week, deferred a summary tabled by the petroleum ministry and asked it to bring the document again after re-examination.
In remarks submitted to the ECC, the Finance Division pointed out that the petroleum ministry and Ogra should ensure that the provisional arrangement proposed in the summary did not contravene a judgment of the Lahore High Court in the matter nor did it adversely affect NAB investigations into the Ogra scandal.
In response, the ministry said comments of the Finance Division were sent to Sui Northern Gas Pipelines Limited (SNGPL), Sui Southern Gas Company (SSGC) – the gas distributors – and Ogra for seeking formal assurance and confirmation.
SNGPL and SSGC have submitted their response in the form of legal opinion of Abid Hassan Minto.
Minto was of the view that the federal government could issue directives or policy guidelines, which was the only legal way to implement decisions. He suggested that the proposed policy guidelines had nothing to do with the Ogra scam or court decision.
A senior government official pointed out that the socio-political programme of the government aimed at providing gas to untapped villages had increased the ratio of retail consumers compared to bulk users. “This has caused an increase in UFG levels.”
Apart from this, he added, the law and order situation had also worsened and if the government did not bail out the distribution companies, they would collapse financially.
The amount of Rs49 billion had been stuck with the gas companies since they won stay orders from courts following reversal of the decision on raising the UFG ceiling from 5% to 7%.
During tenure of former Ogra chairman Tauqeer Sadiq, the regulator had raised ceiling to 7% for 2009-10. However after one month, the decision was reversed and UFG returned to 5%.
According to the petroleum ministry, after the vacation of stay order by the Lahore High Court, Ogra is to adjust Rs13 billion in revenue requirements of SNGPL for financial years 2010-11 and 2011-12. It has to adjust another Rs8 billion for 2012-13 having cumulative impact of Rs21 billion.
“If the Sindh High Court also vacates its stay order, the financial impact on SSGC will be Rs28 billion for the last three years,” the ministry said.
It proposed that the following should be provisionally allowed as gas sales volumes for UFG benchmarking. (i) Volume pilfered by unregistered consumers but detected and determined by the companies (ii) volume against minimum billing amount charged from domestic consumers (iii) volume consumed in law and order-stricken areas and (iv) impact of change in the bulk-retail ratio on UFG using 2003-04 as the base year.
“These measures will help pass Rs49 billion on to gas consumers, otherwise the utilities will become bankrupt,” a ministry official said.
Published in The Express Tribune, July 8th, 2014.
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The money plundered by touqeer sadiq and his likes is going to be paid by consumers ?? Is this what the article is saying.
7% loss .. and they don't want to be bankrupt then they should reduce it to 2 % like every where in the world.