Petroleum Division briefs Senate: Ogra law amendment has helped govt collect Rs250bn more revenue

ISLAMABAD: The amendment in the Oil and Gas Regulatory Authority (Ogra) Ordinance, 2002 on March 3, 2022, paved the way for the caretaker government to collect Rs250 billion above the estimated revenue requirements of Rs700 billion through gas companies -Sui Northern Gas Pipeline Ltd (SNGPL) and Sui Southern Gas Company (SSGC) for fiscal year 2023-24.

The Senate standing committee on petroleum which met here with Mohammad Abdul Qadir in chair on Wednesday was apprised that the caretaker government has set a target of Rs950 billion against Rs700 billion revenue recommended by the Ogra for both gas companies as the amendment in Ogra Ordinance, 2002, had restricted the government from downward revision.

After the amendment, there is no upper limit to increase the gas tariff due to no mention of ceiling in the amended ordinance.

Abdul Rasheed Jokhi, DG Gas (Petroleum Division) gave a briefing to the members committee on the price of indigenous gas for various sectors before and after the recent increase in its prices.

Defending the government’s decision, the official of the Petroleum Division contended that a surplus of Rs250 billion will be charged from domestic and other consumers as a revenue shortfall of Rs65 billion of first fourth months (July-October 2023) of eight hours per day gas sale and Rs210 billion as the cost of RLNG supply for current winter.

The revenue requirements for SNGPL is Rs358 billion and Rs339 billion for SSGC to meet their expenditure for the current fiscal year. Around 90 percent of total revenue will be gone to producers. Responding to a question, he said 300 percent variation in various wellhead prices was due to various oil and gas policies in the past.

“An increase in the sale prices of gas was due in July but as the government was in a transition period; therefore, political government (PDM government) left on interim government which later raise the price with effect from November 2023,” the official said.

Moreover, the committee discussed the issue of levying flat rates for gas consumers in Balochistan. The DG Gas said that the same tariff rates have been charged to all consumers across the country. The government is looking into a verdict of Balochistan High Court which says that the consumers in Balochistan in the winter must charge gas bill up to Rs7,000, he added.

Managing Director SSGC Imran Maniar hinted that the bill of cold areas of Balochistan would get gas bills in the winter around Rs96,000 due to high consumption.

Senator Mohsin Aziz remarked that Khyber-Pakhtunkhwa and Balochistan are among the largest producers of gas in the country, but unfortunately, a major portion of this gas is being utilised in Punjab. Moreover, the government has increased the per BTU price from Rs1,100 to 2,600 for KPK industrial sectors and reduced the per BTU price from Rs3,600 to 2,700 for industrial sectors in Punjab.

Senator Mohammad Abdul Qadir stated that the government should formalise a policy for the import of LNG and allow private parties to import LNG to fulfil local demands. He also directed the ministry to submit details of the recent increase in the next meeting.

The official of the Petroleum Division said that an increase in gas prices would help to curtail to further increase the oil and gas circular debt which increased in last three years to Rs2.084 trillion (June 2023) from Rs1.1trillion (June 2020).Rupee depreciation, variation in well-head prices, non-recoveries of the cost of gas since 2013 has increased in receivables of oil and gas producers and gas companies.

In a break-up, the official said that as no gas subsidy has been allocated in the federal budget, a Rs140 billion cross-subsidy has been given to protected domestic consumers, Rs45 billion fertiliser plants on gas companies network and Rs2 billion for Tanoor. The cross recovery will be recovered from revised gas tariff raise for industry, he added.

Senator Mohammad Abdul Qadir was of the view that fertiliser companies have failed to cut the shortfall of urea and DAP despite getting gas at subsidised rates. The committee directed the ministry to provide details of fertiliser produced by these companies against the gas.

Earlier, responding to urea shortfall in the country, Abdul Rasheed Jokhi, stated that Pakistan’s daily consumption stands at 4000 mmcfd against the production of 3000 mmcfd.

However, local consumers consumed 950 mmcfd, and almost 750 mmcfd has been utilised by fertiliser companies, namely, FFC and Engro, with a cut-off of 350 mmcfd and 250 mmcfd. Moreover, approximately 85 percent of gas utilised by fertiliser companies has been provided by Marri Petroleum, and 15 percent has been provided by other companies.

Copyright Business Recorder, 2023