Rs 417 billion dues on account of GIDC: Presidential Ordinance to be promulgated

The federal government has decided to introduce a Presidential Ordinance to resolve Rs 417 billion outstanding amount on account of Gas Infrastructure Development Cess (GIDC) pending against various gas consumers since 2012. Director General Gas, Ministry of Energy, Petroleum Division, Shahid Yousaf stated this while briefing a subcommittee of the Public Accounts Committee (PAC) which held its meeting here under the chairmanship of Syed Naveed Qamar to discuss and review Petroleum Division related audit paras of 2016-17. Yousaf said that the ordinance has been drafted in consultation with all stakeholders and as per the proposed ordinance, it is decided that the government will waive off 50 percent of the amount outstanding against these sectors to avert court cases, as court cases take decades in settling the matters. He said that the only objective behind the move is to recover the outstanding amount and in future no sector will be allowed to delay the cess.
Responding to a question raised by the convener committee, the secretary Petroleum Division said that the government will lay down the ordinance before the Parliament after 90 days.
The officials of the Auditor General of Pakistan informed the panel that since 2015 Sui-Northern Gas Pipelines Limited (SNGPL) has been supplying imported Re-gasified Liquefied Natural Gas (RLNG) to fertilizer, power sector and other clients without any Tripartite Agreement-1 (TA-1). The officials said that the SNGPL purchased Rs 95 billion RLNG and supplied it to various clients for Rs 106 billion but none of the clients are interested in paying the payments to the gas utility. The chairman committee asked the SNGPL officials why they have failed in making a Tripartite Agreement-1 (TA-1) with end consumers. The SNGPL officials said that Ministry of Energy, Power Division, kept creating hurdles in signing of tripartite agreements with most of the consumers as bulk of the imported RLNG is meant for LNG-based power plants. The officials further stated that the Power Division keeps on revising demand as it has also restarted consuming expensive furnace oil in power production by replacing LNG.
The officials said that recently Power Division has revised downward LNG demand from 850 million cubic feet per day (MMCFD) to 700 MMCFD.
The PAC subcommittee also directed the concerned officials to provide specific reasons for not signing TA-1 and why the transaction is being handled illegally i.e. without having any legal agreement in place.
The subcommittee was informed that SNGPL had regularly offered TA-1 signing with Pakistan State Oil (PSO) provided it is on as-and-when available basis since independent power plants (IPPS) are not willing to sign firm take-or-pay agreement with SNGPL.
Also Power Division''s actual consumption is far less than their demand given on firm basis which regularly leads to damages for the company but there is no redressal. Power consumption in August is only 700 MMCFD; however, demand was 850 MMCFD.
Moreover Power Division reduced its firm demand from 850 MMCFD to 700 MMCFD for September a few days ago even though ordering for RLNG is done 90 days in advance and Power Division is fully aware of it. Hence the SNGPL can not afford to enter firm take-or-pay TA-1 while the Power Division is neither adhering to demand given by it nor is it forcing its IPPS to enter into firm agreement with SNGPL.
It was pointed out by Petroleum Division that power is still costing expensive on FO while not utilising cheaper RLNG owing to technical reasons which make RLNG consumption even more difficult.
The Power Division official off the record said that GPPS can only pump electricity into 500 KV line while there is no linkage with lower capacity lines. Using this excuse, FO is being used which is known for massive adulteration and low efficiency.
The panel also discussed the outstanding payments of Sui Southern Gas Company Limited (SSGC) against various clients. The panel was informed that SSGC has to receive Rs 90 billion from various gas consumers, adding that large chunk of the outstanding amount is against K-Electric and Pakistan Steels Mills.
Responding to the convener committee''s question, Managing Director (MD) SSGCL Amin Rajpoot said that K-Electric is declining to use RLNG for power generation and insisting for the supply of local gas. He said that it is time that K-Electric should use RLNG.