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ISLAMABAD: The federal government has revised downward petroleum levy (PL) target for current financial year by 49.8 percent, ie, from Rs658 billion to Rs330 billion.

Secretary Petroleum Dr Arshad Mahmood told Business Recorder that Finance Division is engaged with the IMF for downward revision of the PL target based at the PL collection remained low against the target during first quarter of current financial year.

He said the Petroleum Division had set a target of PL collection of Rs658 billion in current financial year 2021-22. The government had budgeted Rs610 billion collection through PL in the current financial year.

Earlier, in the Senate Standing Committee on Petroleum, the Oil and Gas Regulatory Authority (Ogra) Chairman Masroor Khan, told the members that the government had revised downward its PL target to Rs330 billion.

The chairman and the committee members asked if the government is going to raise the petroleum prices by Rs4 per litre each month under the PL, according to the announcement of Finance Minister Shaukat Tarin.

The secretary said that the Finance Division had multiple options to adjust the taxes and it was forecast that the crude oil prices globally would come down.

The Finance Division stated on November 5 that low rates of PL on petroleum products dented the PL budget of Rs152.5 billion during (July-September, 2021) first quarter as compared to Rs20 billion realised only.

Rs203bn shortfall: Govt will have to raise petroleum levy to Rs30?

Responding to a question regarding Saudi government’s pledge to invest $14 billion in setting up an oil refinery, he said not only Saudi Arabian Oil Company (Saudi Aramco) but companies from the UAE and China also showed their interest after approval of New Refineries Policy 2021 as government offered incentivised internal rate of return (IRR).

Meeting of the Senate Standing Committee on Petroleum was held under the chairmanship of Senator Muhammad Abdul Qadir. The committee members expressed their displeasure and staged a token walkout against the constant absence of minister in-charge in the committee meetings.

At the outset, the committee deliberated upon present status of Implementation of Third Party Access (TPA) to the private sector with regard to the use of LNG terminals. The secretary Ministry of Energy (Petroleum Division), while briefing the committee also said that the private sector is engaged in development of two more LNG terminals.

TPA Rules and Network codes have been developed to provide access to pipeline network to the private sector investors and consumers. “We have laid a 42” dia 1,100 kms long RLNG pipeline. Planning for another RLNG pipeline is in advance stage to transport the imported volumes of RLNG from the upcoming LNG plants of the private sector,” he added.

The committee chairman said that “Why don’t we let private businesses take responsibility of importing RLNG in the country. We should definitely go towards private parties for this purpose, in order to eliminate the impediments, so that the burden on the government would be reduced and uninterrupted supply with lower RLNG price is ensured positively to save the state from loss of billions of rupees.”

On the question of market liberalisation in the LNG sector, the secretary informed that the government is focusing on private sector participation in the LNG supply chain, development of new LNG import terminals in the private sector, third-party access to LNG terminals and pipeline network, construction of new gas pipeline from Karachi to Lahore, development of gas storage and LNG virtual pipeline.

He said that the Petroleum Division is also working on new LNG Policy for improved policy and regulatory framework with a special focus on private sector participation in the LNG sector. Despite the fact that existing LNG terminals are running at peak capacities and utilisation of terminals is way higher than global average, the PLL is discussing the third-party access to accommodate private sector.

July-October: Govt suffers around Rs203bn revenue loss on PL, GST

There are numerous legal, commercial/financial, operational and technical issues that need to be addressed for allowing TPA to private sector. Such as, limited pipeline capacity and challenges in allocation of pipeline capacity from the SSGCL and the SNGPL, the PQA ability to handle numbers of LNG vessels and night navigation for LNG vessels. The petroleum secretary was of the view that the PPRA rules are not ideal for on spot procurement of RLNG supplies. The PPRA rules should be amended. The chairman committee assured the officials that they will write to the Finance Ministry on the matter.

“We are here to help and we will do whatever we can to assist the ministry in this regard. This is not something which cannot be fixed,” commented Chairman Committee Muhammad Abdul Qadir.

While discussing the problems faced by the people of Quetta, Ziarat, and the other areas where the weather reaches below freezing point during winter, the chairman committee said that the people living in those areas should not be charged higher slab rates, as their consumption is high only during winter months of extreme cold.

“People are being charged high just because of this slab formula. Appropriate measures should be taken to provide relief to these people. They cannot afford to pay the gas bills during these months.”

The chairman committee suggested that ministry officials should sit down with local representatives and devise a way out and introduce subsidised rates for these specific areas. The chairman committee directed officials to come up with a plan in the next meeting of the committee.

The committee meeting was attended by senators, Afnan Ullah Khan, Saadia Abbasi, Fida Muhammad, Aon Abbas, Quratul Ain Marri, Rukhsana Zuberi, officials from the Ministry of Energy (Petroleum Division), the SSGC, the SNGPL, and the PLL.

Copyright Business Recorder, 2021

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