ISLAMABAD: A parliamentary committee expressed displeasure over the continued absence of the minister of state and the secretary petroleum since July 10, 2022, and decided to issue summons in case they do not attend the next meeting.
Senate Standing Committee on Petroleum met under the chairmanship of Mohammad Abdul Qadir on Tuesday.
The committee members criticised the government for increasing petroleum products prices despite a substantial decrease witnessed in the international market.
The chairman committee said the federal government is committed with the IMF to collect petroleum levy (PL) per month to achieve the budgetary target of Rs750 billion for the current financial year.
Referring to the price mechanism of petroleum products, the chairman said the government had assured the IMF that it would collect total Rs91 billion by imposition of PL and GST monthly.
Gradually, he said the PL would be levelled at the rate of Rs50 maximum limits allowed under the national budget passed by the parliament.
The Chairman Committee further revealed that private oil dealers of the Pakistan State Oil (PSO) had benefitted of the delay in maturing of LCs by the PSO and other oil companies. He alleged that they opened the LCs after the resolution of LCs and sold the oil in the local market on own money. He said the central bank did not intervene in the matter.
Earlier, Oil and Gas Regulatory Authority (OGRA) Chairman Mohammad Masroor said that being a regulator, it worked out prices of petrol and HSD on basis of cargos berthed at ports in the last 15 days. Around 70 percent of petrol and 50 percent HSD were imported against total consumption of the country, he said and prices were calculated at the inventories of the PSO which held 50 percent share of the oil market.
Matters that were discussed included reasons for the increase in petroleum prices; briefing by the Pakistan LNG Limited (PLL) regarding action taken for long-term allocation of LNG terminals to private firms; briefing by the SNGPL about the present status of the approval of the Initial Access Agreement with private shipper UGDC by its Board of Directors (BoD).
Being briefed by the PLL regarding action taken for long-term allocation of LNG terminals, the committee was informed that the ECC/Cabinet approved the allocation of GOP’s contracted utilised capacity on three months rolling basis to facilitate the private sector import of LNG which is linked to terminal capacity.
The presentation showed that the two LNG terminals did not utilise their capacity 100 percent due to multiple reasons. The average utilisation of the second terminal remained 72 percent in 2021-22, 83 percent in 2020-21, 52 percent in 2019-20, and 62 percent in 2018-19.
Acting MD PLL said it was a wrong perception that Pakistan did not secure LNG deals when the price dipped to $4 dollar per mmbtu. He said the LNG spot cargo was available at that time but the LNG contract at fix rate was only available in long-term contracts and the country had no gas storage capacity. He further explained that the PLL invites tender on spot purchase once demand was confirmed.
The PLL is working on short- and long-term LNG supply tenders; therefore, feasibility of long-term tenders is not prudent as it will reduce the government’s ability to adjust LNG import to meet demand in the country.
Enhancement of current short-term allocation period beyond three months may be taken after considering the response of LNG suppliers in the next PLL tender. Moreover, the parties will be required to agree on a framework for the recovery of any price differential.
Regarding import of LNG by private firms in the country and the present status of the approval of the Initial Access Agreement with private shipper UGDC by its Board of Directors (BoD) the Committee was informed that as per TPA Rules and Network Code, gas supply can only be provided up to industrial supply main on the distribution network.
The OGRA has issued a clarification that transportation services can be provided beyond industrial supply mains.
The SNGPL has filed a review petition before the Authority response which is awaited from the OGRA.
President All Pakistan CNG Association was of the view that when the oil and gas market is open to private players it will play an important role in regulating gas prices thereby ensuring the influx of foreign exchange. He asserted that the OGRA is in favour of an open policy that will de-monopolise the market.
The Chairman Committee, Senator Abdul Qadir, weighing pros, was of the view that the private sector must be allowed to enter the oil and gas market in Pakistan.
Copyright Business Recorder, 2022
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