Gas sector: PD asked to prepare formula based on data for pricing mechanism

ISLAMABAD: The provinces have asked the Petroleum Division to prepare data-based formula for pricing mechanism of the gas sector. The Petroleum Division hosted the consultative meeting on pricing mechanism of gas and LNG on Monday afternoon. Minister for Energy Omar Ayub Khan and Special Assistant to Prime Minister on Petroleum Nadeem Babar co-chaired the meeting with the energy ministers of all the provinces.

Taimur Khan Jhagra, finance minister, Government of Khyber-Pakhtunkhwa, Imtiaz Sheikh, minister for energy, Government of Sindh, Dr Mohammed Akhtar Malik, energy minister, Government of Punjab, Hiyamatullah Khan, Advisor to the CM Khyber-Pakhtunkhwa on Energy and Power, and Chief Secretary Balochistan Fazeel Asghar, represented the respective provinces.

The forum explored the issues, challenges and plausibility of implementing a country-wide sustainable and affordable gas pricing mechanism. At the onset of the meeting, Federal Minister Omar Ayub Khan thanked the provincial ministers for joining the meeting for a national cause.

He said that Prime Minister of Pakistan Imran Khan was keen to resolve the issues pertaining to the gas sector and maintaining the supply chain of gas throughout the country. SAPM on Petroleum Nadeem Babar initiated the discussion to explore sustainable and affordable mechanism for gas tariff regime.

He recapped the salient points of the consultations held by the federal government and Federation during the Council of Common Interest and the gas seminar organised by this division in September 2020. He said that the rate of production of local gas has decreased over the years, which contributed in supply demand gap in the gas sector.

He also highlighted the vision of Prime Minister Imran Khan to resolve the issue within the premises of constitutional right of the provinces, which is acceptable for all the stakeholders. Babar also spoke of legal constraints of LNG to be added in gas pool.

He said that as per decision of the previous government, the LNG has been declared a Petroleum product (i.e. petrol) and not natural gas, consequently, LNG is "ringfenced" from local gas that is why the OGRA cannot include it in the gas pricing and the government cannot provide cross subsidy mechanism to meet all the demand of gas.

He also apprised the forum about the cross-subsidy being provided by the government on energy sector. The SAPM concluded the consultative session describing the meeting as a step in the right direction. He said follow-up sessions will be continued between the federal government and the provinces to formulate the gas tariff mechanism nationwide.

Copyright Business Recorder, 2020