Rs4bn allocation against RLNG supply: ECC refuses to give relief to export sectors

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has refused to allocate Rs 4 billion against the supply of RLNG to export-oriented sectors, saying that the Petroleum Division should meet the requirement from its available balance at this stage, sources close to the Secretary Petroleum told Business Recorder.

Sharing the details, sources said the ECC, in its meeting held on September 17, 2018 while considering a summary on "natural gas sale pricing' decided that gas supply to the industrial sector (exporters of five zero-rated sectors namely, textile, including jute, carpets, leather and sports and surgical goods in Punjab) will be revised from 28:72 to 50:50 for domestic gas and RLNG, respectively. The weighted average gas tariff of such consumers will be $ 6.5 per MMBTU. Gas price for similar consumers of SSGC and those of SNGPL in KP will remain unchanged.

The Petroleum Division argued that there is a differential in the sale price of RLNG and indigenous gas whereas supply of RLNG of mix of both at $ 6.5 per MMBTU would require a subsidy for export-oriented (zero rated) industry, the ECC of the Cabinet, while considering a summary of October 15, 2018 submitted by Petroleum Division gas gave the following directives: (i) 100 per cent RLNG shall be provided to zero-rated industry for three months, ie, December to February; and (ii) a blend of system gas and RLNG of 50:50 shall be provided to zero-rated industry for a period of nine months ie March-November.

According to the Petroleum Division, the latest budgeted subsidy position furnished by Finance Division indicates that the original budget was Rs 10 billion of which 8 billion has been released. After expenditure of Rs 1.159 billion, balance budget amount was Rs 6.8413 billion.

Petroleum Division claimed that due to shortage of indigenous gas SNGPL supplied 100 per cent RLNG in March 2020.

At a recent meeting of the ECC Petroleum Division requested that the subsidy claim for the month of March 2020 based on 100 per cent supply, amounting to Rs 4.055 billion based on actual verified bill/claim of SNGPL, may be approved for release out of the budgeted allocation for the current financial year and any resultant shortfall in the budgeted allocation at subsequent stage will be met through a supplementary grant.

During the ensuing discussion, the Finance Division stated that sufficient funds were available with the Petroleum Division under the relevant head for the purpose. Therefore, Petroleum Division could meet the requirement from the available balance at this stage. In case of any shortfall of funds in future, the case may be taken up with the Finance Division.

The ECC also formulated a committee of relevant stakeholders under the chair of Adviser to the Prime Minister on Commerce and Investment to deliberate on the issue of power subsidies to export oriented sector and submit its recommendations to the ECC. Secretariat support to the Committee shall be provided by Ministry of Commerce.

Copyright Business Recorder, 2021