ECC meeting today: Government likely to take decision on gas sale price

ISLAMABAD: The federal government is likely to take a decision on the sale price of natural gas in a meeting of the Economic Coordination Committee (ECC), which is scheduled to meet (today) Wednesday.

While talking to Business Recorder, Special Assistant to the Prime Minister (SAPM) on Petroleum Nadeem Babar said the ECC would examine the recommendations of the Oil and Gas Regulatory Authority (Ogra) related to the sale price of natural gas to both the gas companies, the Sui Northern Gas Company Limited (SNGPL) and the Sui Southern Gas Company (SSGC), to meet the revenue requirements of financial year 2020-2021.

The regulatory authority had called a public hearing on the petition of the SNGPL, which is seeking almost 110 percent increase in prescribed prices for fiscal year 2020-2021.

The SSGC sought an increase of 20 percent (Rs85/mmBTU) to meet their revenue requirements for the fiscal year, and overcome shortfall of previous years. While talking to media after attending an event “Private LNG import by UGDC under GoP initiative”, organised by UGDC, the SAPM said the government was working on a proposal for unbundling both gas companies to improve their efficiency.

He said the government intended to separate transmission network, so that private sector could use them. This would help both companies to control their line losses, unaccounted-for-gas (UfG) and make them competitive to private sector.

He said these companies were making financial losses in sale of gas but they had no losses on gas transmission. He further said that in upcoming winter, 1350 mmcfd LNG would be imported to meet the deficit.

Currently, he said both the LNG terminal were running on 1200 mmcfd. Referring to gas shortages in Sindh, he said the federal government had the capacity to build the gas pipeline for Sindh to fill the demand-supply gap of 300 mmcfd in winter.

He further said that the unutilised capacity of around 150 mmcfd LNG could be imported by provinces by creating their own companies or any sector of the economy. Earlier, while talking at the event, he said that both Sui companies failed to provided services to the consumers, and there was resistance from their side to allow private sector to import LNG.

Member Gas Oil and Gas Regulatory Authority (Ogra) Muhammad Arif agreed with the decision of the federal government to allow private sector to import LNG. He said it was a new subject for the Ogra.

“Policymakers, regulator and private sector are working together to make the LNG import by private sector possible,” he added. He further said the import of LNG by private sector was a “shortcut” to meet the growing gas demand in the country.

He further suggested that Ogra was working for strengthening the internal mechanism of both the gas companies with a view to bringing about improvement in UfG and other services. Referring to provinces’ decision not to take LNG because it was expensive, he said the cost of fuel would come down, if both gas companies reduced their cost of services, which was alarmingly high, and weighted average price formula was implemented.

Chief Executive Officer (CEO) UGDC Ghayas Paracha announced that his company was all set to import LNG by November 2020, which would be provided to CNG stations across the country. He said in Punjab only 673 CNG stations applied for the imported LNG to run their stations.

He said they would use unutilised capacity of both LNG terminals, and share the financial burden of the government in terms of capacity charges, duties and taxes. He said that around 3.7 million CNG vehicles would benefit.

The country had 3,300 CNG stations which was the highest number in the world. Bangladesh had adopted model from Pakistan to run CNG stations on imported LNG gas. Iqbal Z Ahmed, Chairman and CEO of Associated Group, which owns Pakistan GasPort Consortium Limited, announced that they had already made expansion in the LNG terminal, and the second terminal would start working in Gwadar.

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