ISLAMABAD: Energy Minister Hammad Azhar said the government would introduce a bill in the parliament within 8-10 days for weighted average cost of gas (WACOG) for the sale of local and imported liquefied natural gas.
He was responding to questions during the background briefing on the finance supplementary bill, economic indicators and the State Bank’s initiatives, held here on Tuesday.
He said Sindh also understood the importance of WACOG but because of political reasons would not openly support it and hence, the government has evolved consensus on WACOG under which, the average gas prices are estimated to go up by 30pc gradually over the next few years.
“We are not going to increase these gas prices immediately but in a phased manner as the government expected the international LNG prices would come down in the coming month.”
At present, local gas supply and LNG import has a 70:30 ratio. This would change to 50:50 in two years but the share of the LNG would increase to 80-90pc in a few years for which the WACOG was important, Azhar maintained.
He said the gas shortage did not emerge suddenly but has been developing over the years. Therefore, the PPP Prime Minister, Yousuf Raza Gilani, had imposed a ban on new connections in 2011, which slowed down the shortage. The ban was, however, removed by the PML-N in 2017 and now the country has gas only for the next 10 years.
He said successive governments tried to reform the gas pricing but failed.
The minister explained that under the existing law, the government cannot fix the consumer price of LNG as gas because it was defined as a petroleum product. At present, the imported cost of LNG is about Rs8 billion per cargo against which, the gas companies could recover only Rs1 billion from residential consumers. The gas companies have already faced about Rs100 billion loss in the last three months on this account, while the government cannot divert more LNG to the residential consumers, otherwise, the gas companies would go bankrupt.
The minister said the total local gas allocation at present was about 4,000 million cubic feet per day (MMCFD) but this was down to 3500mmcfd because of about 9pc annual depletion of local gas fields.
On the other hand, gas demand in domestic sector goes up by five times to about 2000mmcfd in winter, leaving just 1500mmcfd to other sectors including industry, fertilizer, and power etc.
Azhar said gas producing provinces were opposed to inclusion of the LNG in average pricing as they wanted to supply local gas to the districts where it was produced but now both Sindh and Khyber-Pakhtunkhwa were now heading towards gas shortage.
Responding to a question, he said the KP could demand for supply of electricity on the basis of cheaper hydropower it produced, while Punjab with lower system losses and theft could also insist on actual power tariff instead of subsidising high losses and theft in Sindh and Balochistan.
Copyright Business Recorder, 2022