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Print Print 2022-06-20

Gas tariffs now under govt focus

  • Finance Minister Dr Miftah Ismail directs Petroleum Division to come up with proposals for revision in gas tariffs
Published June 20, 2022

ISLAMABAD: Finance Minister Dr Miftah Ismail has directed Petroleum Division to come up with proposals for revision in gas tariffs aimed at rationalization of subsidies between LNG price and indigenous gas price, sources close to Secretary Petroleum told Business Recorder.

These directions were issued at a recent meeting of the Economic Coordination Committee (ECC) of the Cabinet when a summary of Petroleum Division titled “liquidity requirement of PSO and PLL for import of LNG and petroleum products” came under discussion.

Petroleum Division, sources said, briefed the ECC about the case, seeking supplementary allocation/ TSG of Rs.36 billion for the month of June 2022 under the head of Petroleum Division. It was further noted that the allocated amount shall be released to SNGPL against its pending claims in respect of cost of RLNG diversion to domestic sector for setting off the payables of PSO and PLL against RLNG supply.

It was further requested that liquidity requirement of Rs.174 billion for the months of July-September 2022 may also be allocated in the next financial year budget.

Moreover, Petroleum Division agreed to the following proposals of the Finance Division: (i) Finance Division will place the requisite amount in the demand of Petroleum Division, which will ensure that the entire amount is transferred to PSO and PLL, as deemed appropriate, without any deduction by the SNGPL; and (ii) Finance Division will open a separate head for subsidy on LNG supply to domestic sector and the Supplementary Grant/ Technical Supplementary Grant would be adjusted against the SNGPL’s subsidy claims.

Ogra raises gas prices up to 45pc

However, during the ensuing discussion, the Secretary Petroleum stated that due to a surge in energy commodity prices in the international market, the import cost of LNG and Petroleum Products had substantially increased. Both PSO and PLL were facing liquidity issues because of delayed/ non-recovery of LNG sales from customers. The financial crunch being faced by PSO and PLL was not only limiting their ability to procure LNG but also facing difficulty in meeting payment obligations of international suppliers. It was highlighted that a tariff differential of Rs. 162 billion had piled up because of diversion of costly LNG to domestic (residential) consumers past 4 winter seasons starting FY 2018-19.

Since the RLNG was diverted, as per the approved policy of the government; therefore, recovery of it may also be funded through the government subsidy.

The Additional Secretary, Finance Division highlighted that some remedial and drastic tariff measures should be taken to avoid build-up of circular debt in gas sector as is the case in power sector. He further contended that fuel subsidies should be rationalized based on fiscal space available in the budget.

The Minister of State for Petroleum also subscribed to the viewpoint of Additional Secretary Finance and stated that revision in gas tariff needs to be considered for rationalizing the subsidies between LNG price and indigenous gas price, and the LNG diverted to domestic sector (residential consumers) for past four winters.

The Finance Minister directed the Petroleum Division to come up with proposals for revisions in gas tariff.

The ECC also approved the proposal of Petroleum Division with respect to allocation of Rs 36 billion as Supplementary/ Technical Supplementary Grant for the month of June 2022 in the head of Petroleum Division against supply of RLNG.

Copyright Business Recorder, 2022


Comments are closed.

Zeeshan Saboor Jun 20, 2022 09:02am
Why not electricity tariff under government focus, more you use your bill should be less instead of increased trend like now. It should be checked on war footings; why people who are paying bills for using electricity at that much high cost and Govt officials and bureaucrats and other high officials are using it for free and we are paying out of our blood for their free usage.
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Hyder Ali Jun 20, 2022 11:25am
Innalilahay wa inalehay rajyeaoon
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Mohammed.fiaz Jun 20, 2022 01:18pm
The credentials of the person in charge of the country economy should be checked for verification because all this guy is doing and the government are taking the economy towards defaulting,I.stead of seeking cheaper sources for oil and gas,Iran,Russia,and other countries,and alternative methods of payment such as currency to currency or goods to goods instead of relying on reserve currency of dollars.
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