Govt engages provinces in crucial gas policy shift

The government announced major shift in gas policies towards introducing a weighted average cost of local and imported gas (WACOG), improving cheaper availability of LPG and bifurcate transmission and distribution business of gas utilities.

Speaking at a news conference, Energy Minister Omar Ayub Khan said his ministry was engaged with provinces 'for give and take' on board introduction of WACOG for local gas and imported LNG because supply of local gas was not sustainable going forward.

"Not agreed fully", he replied when asked if Sindh government had been convinced over WACOG - an average price of local and imported gas having a price differential of over Rs900 per unit. He said his team had very positive and constructive discussions with Balochistan, Khyber Pakhtukhwa and Sindh in recent weeks on the subject.

Special Assistant to Prime Minister on Petroleum Nadeem Babar said the previous government had declared liquefied natural gas as a petroleum product through an act of parliament to facilitate its import which would have to be amended through another act of parliament to redefine LNG as gas for introducing the concept of WACOG.

Because of these lacunae, the LNG, even though being supplied to residential and commercial consumers to meet shortages, could not be charged at actual cost because it was 'ring-fenced' as a petroleum product. He said the matter would be resolved through a summary to be approved by the Economic Coordination Committee (ECC) of the Cabinet for the price mechanism and then for cabinet approval.

He said the domestic gas was depleting very fast and its supply was unsustainable. At present about three million applications for gas connections are pending with the gas companies and the government was restricting its expansion as only 400,000 applications were being entertained for fresh connection.

Babar said a summary was being taken to the Cabinet Committee on Energy (CCoE) in its upcoming meeting to divide gas pipeline system initially into two separate entities - transmission and distribution businesses. He said the number of gas companies would then be further increased in due course.

According to him, the new Liquefied Petroleum Gas policy to be presented for approval would envisage comprehensive mechanism to bring down prices of LPG at affordable level and ensuring its availability in far flung areas of the country. A committee was constituted under Deputy Planning

Commission which would present its report this month.

Talking about recent gas shortage in Karachi, SAPM said the Sindh government had not yet informed the centre regarding promised cabinet decision to provide right of way for laying down 17km long gas pipeline from Port Qasim to Sui Southern Gas Company (SSGC) network near Pakland to transport 150-200mmcfd (million cubic feet of per day) of additional LNG into the system.

"We have already completed work on 12km long proposed gas pipeline for which land from private sector had been acquired and awaiting approval for right of way (ROW) to lay down rest of the 5km long pipeline," he said.

He further said that out of 1,200mmcfd of gas requirement in Sindh, about 900mmcfd was utilised in Karachi alone. In case the provincial government allows ROW this week, the centre will complete the gas pipeline by third week of December to resolve the gas shortage through pumping additional RLNG gas. The requirement pipe was available and contractors fully mobilised and would be working round-the-clock, the SAPM added.

Babar continued that on the request of Karachi-based industry, the federal government was providing them gas at Rs930 per mmcfd under five-month (October-February 2021) arrangement.