PM orders half-yearly price projections for fuel, power

ISLAMABAD: Prime Minister Imran Khan has directed the Ministry of Energy to carry out six months’ price projections for petroleum, Liquefied Petroleum Gas (LPG), Regasified-Liquefied Natural Gas (RLNG) and power and propose specific measures to absorb increase in their prices, well informed sources told Business Recorder.

These instructions have been issued to the Ministry of Energy at a time when it is under harsh criticism for not procuring RLNG, used in the power sector, when its prices were lower in the international market.

The public is also criticising the government for continuous increase in prices of POL prices. The projected increase in Petroleum Levy by Rs4 per month till it reaches the ceiling of Rs30 per litre as per agreement with the International Monetary Fund (IMF) will further attract criticism.

The price of LNG has also increased in the country. The new price of LPG per kg increased from Rs 204 to Rs 217. The new price of LPG domestic cylinder increased from Rs 2,404 to Rs 2,559 and that of commercial cylinder from Rs 9,248 to Rs 9,847 for November.

Petroleum prices maintained as PM rejects OGRA's proposal

The prices of electricity are also on the rise due to spike in prices of furnace oil, HSD, coal and RLNG in the international market. On average, the consumers are compelled to pay Rs2 per unit extra monthly under FCA in addition to increase in base tariff and Quarterly Tariff Adjustment (QTA).

The Central Power Purchasing Agency Guaranteed (CPPA-G) has sought Rs4.57 per unit raise in Discos’ tariffs for October 2021. Nepra will hold a public hearing on the request of CPPA-G this week. KE has also filed a petition for increase in its tariff under FCA mechanism.

The sources said issues of energy sector were recently discussed at a meeting of Economic Team, presided over by the Prime Minister. The representatives of the Ministry of Finance, Ministry of Planning, Development and Special Initiatives and Ministry of Energy (Petroleum and Power) gave different justifications for the recent hike in prices of energy related fuels.

The sources said, during the meeting, some of participants argued that the concerned Ministries should prepare projections of energy prices vis-à-vis requirements for the next six months so that fluctuations, if any, can be absorbed.

Prime Minister also directed Petroleum Division to rationalize gas tariff for captive generation plants at par with grid electricity to encourage a shift to grid electricity.

The sources said during the meeting of Cabinet Committee on Energy (CCoE) on November 18, 2021, Minister for Planning, Development and Special Initiatives, Asad Umar, who is also Chairman of the ECC, requested the Advisor for Commerce and Investment, Abdul Razak Dawood to convince industries to switch to using power instead of gas, to manage the supply constraint in winter, with an assurance that the Ministry of Energy (Power Division) will ensure uninterrupted supply of power to industry.

Cabinet decides to increase gas tariff for captive

The CCOE took the following decisions which have also been ratified by the Federal Cabinet: (i) natural gas/RLNG shall be supplied uninterrupted to export oriented industries including the top 50 exporters; (ii)supply of gas/RLNG to export oriented captive power plants shall be monitored till December 15, 2021, It will be re-adjusted in view of the supply/availability of gas; (iii) The CNG sector will remain closed with effect from December 1, 2021 to February 15, 2022; (iv) General Industry (non-export) shall be provided gas on weekly rotation basis, with one day off, for each sector or zone. Cement Industry will be treated at par with the non-export general industry; (v) to boost agricultural productivity, uninterrupted gas supply shall be ensured to fertilizer sector; (vi) dedicated consumers of power sector shall get uninterrupted gas supply; (vii) power production based on LNG will get 5% extra supply during the winter, as compared to last year’s actual consumption; and (viii) after meeting national gas requirement for critical industries maximum efforts will be made to accommodate domestic consumers on priority as already decided by the ECC.

The CCoE also directed the Petroleum Division to make a presentation to the CCoE, on the supply side of gas availability from various sources in the country.

Copyright Business Recorder, 2021