Use of expensive LNG: Govt seeks support of provinces to amend gas pricing formula

Aftab Ahmed

Islamabad: The federal government has decided to seek consent of provinces to implement weighted average price of local and imported gas from the consumers to make LNG acceptable for domestic consumers.

In this regard, Petroleum division secretary Mian Asad Hayaud Din informed Senate Standing Committee on Petroleum that met under chair of Mohsin Aziz on Tuesday that a summary had been moved to Council of Common Interests (CCI) seeking approval of wieghted average gas formula for local and imported gas.

The average price of local gas is over Rs 300 per mmbtu for consumers whereas the price of imported gas is Rs 1700 per mmbtu.

The members of the committee opposed a proposal of weighted average gas and recommended that this proposed plan of gas prices should be implemented in Punjab province and other three provinces should be exempted from it.
At present, the prices of local gas range between Rs 120 to Rs 1400 per mmbtu for different categories of the consumers.

Petroleum secretary said that domestic consumers falling in some slabs could be exempted from weighted average gas price.

Responding to questions regarding ongoing project of installation of 30 LPG AirMix plants for the smooth supply of gas to Balochistan, Secretary Petroleum said that the matter would be taken to Economic Coordination Committee (ECC) as it required Rs 16 billion subsidy annually. He said that it would not be viable until Balochistan Government agreed to subsidize the gas price for the province.

He said the end consumer may receive a gas bill of Rs 31,000 annually compared to LPG domestic user who consumed Rs 19000 worth LPG annually. He said LPG AirMix plant would cost Rs 4600 mmcfd. He said AirMix plants would cost Rs 34 billion annually. Out of total 48 AirMix Plants, 32 were located in the areas covered under Sui Northern Gas Pipeline Limited (SNGPL) and rest 19 fall in the area of Sui Southern Gas Company (SSGC).

Managing Director SNGPL said that the board approved installation of 10 Air Mix plants and acquiring land was in progress. He said despite recalling bidding several times, no interesting party was participating in the bidding process.

Senators belonging to Balochistan criticized the federal government for misguiding the members on installation of 30 LPG AirMix plants in the province. Muhammad Usman Khan Kakar said that the senators were informed that Rs 14 billion was allocated for installation of 30 AirMix plants in the province three years back and tendering process was also initiated. He said it was misguided the members as Petroleum Division now claiming that the business model of LPG AirMix Plants was not cost effective for consumers.

Dr Jehanzeb Jamaldini suggested that the province did not need any AirMix Plant or system gas. The federal government should direct the relevant companies to provide gas from the recent discovered wells in Balochistan.
Senator Sherry Rehman expressed her displeasure over absence of Minister for Energy Umar Ayub from the proceedings of the committee and walk out. She wanted to draw the attention of committee members the shortage of natural gas in Sindh and violation of Article 158 of the Constitution. She said that government was no taking parliamentary committees seriously.

She argued the meeting of the committee should be deferred if minister for petroleum was not available. She alleged no response was received from government side regarding gas shortage in the province producing 70 percent gas of the country.

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