Government rules out gas price increase from July

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PHOTO: REUTERS

PHOTO: REUTERS

ISLAMABAD: Petroleum and Natural Resources Minister Shahid Khaqan Abbasi has announced that the government has no plan to increase gas prices from July this year.

“Though the Oil and Gas Regulatory Authority (Ogra) has recommended gas price revision, the government and gas utilities will be able to manage things without increasing the tariff,” he said.

Where will oil and energy prices go?

Speaking at a press conference on Monday, Abbasi said the government had made plans for gas supply in the coming winter season and despite an increase in connections, things would be normal later in the year.

He revealed that applications for two million gas connections had been pending with Sui Northern Gas Pipelines Limited (SNPGL) when the PML-N government came to power. “The government has framed a merit-based policy and those applying first are getting connections.”

Now, 1.5 million applications are pending. The government has also lifted the ban on commercial gas connections.

Turning to demands for energy supply by the Sindh government, Abbasi pointed out that the province appeared to be rich in oil and gas reserves as exploration companies had discovered five hydrocarbon deposits in the past few weeks. These have added 70 million cubic feet of gas per day (mmcfd) and 600 barrels per day (bpd) of oil.

The new gas would be added to the system of Sui Southern Gas Company (SSGC), which would provide it to Sindh. “The gas discovered from the new fields is worth $150 million per annum at current prices,” he said.

He pointed out that oil and gas companies had made 98 discoveries since the current government came to power in June 2013 and added 944 mmcfd to the national network. However, a same volume of gas has been depleted from the existing fields.

He dispelled the impression that the federal government was not implementing Article 158 of the Constitution under the 18th Amendment.

Gas on the SNGPL was being provided to the consumers of Punjab and Khyber-Pakhtunkhwa, he said, adding gas supply on the SNGPL network had dropped 35% from 1,665 mmcfd to 1,120 mmcfd since 2010 after the implementation of the 18th Amendment.

However, gas supply on the SSGC network, which covers Sindh and Balochistan, has increased.

LNG imports

Responding to a question about allocation of liquefied natural gas (LNG) imports, Abbasi said the allocation policy was not applicable to the LNG imports as it was an open field and any company or province could import it.

He said Pakistan State Oil (PSO) was now importing 600 mmcfd of LNG, which was being supplied to the industry, captive power plants, independent power producers (IPPs) and compressed natural gas (CNG) outlets.

He claimed that the country was importing one million tons of fertiliser before LNG imports, but now it would be exporting 0.6 million tons due to gas supply to the fertiliser industry.

Responding to a question, he said PSO had a commercial contract with Qatargas and gas supply could only be stopped in case of international sanctions and force majeure.

However, the dispute between Gulf countries would not affect LNG imports from Qatar. Pakistan imports 2.7 million tons of LNG from Qatar whereas India imports 9 million tons. South Korea, Japan and China are importing 60 million tons from Qatar.

He disclosed that Pakistan was negotiating government-to-government LNG import deals with different countries including China, Turkey, Russia, Malaysia and Oman.

He emphasised that the government was now focusing on private investors who were interested in setting up LNG terminals in Pakistan. This way, the government will not have any liability.

Current account gap to widen faster with oil price increase

Responding to a question about the Iran-Pakistan gas pipeline, Abbasi said Pakistan had conveyed to Tehran that it could not execute the project due to the restriction on dollar transactions.

He said the snap-back clause was another hindrance as international financial institutions would not be ready to finance the project. Under the clause, the sanctions that had been lifted from Tehran could be put in place again.

Published in The Express Tribune, June 13th, 2017.

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