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Thursday, 30 June 2011


ISLAMABAD: The government has decided to increase natural gas tariff by 15 per cent for domestic consumers and between 18 per cent and 96 per cent for different categories with effect from Friday (the first day of the new financial year) and spread uniform gas loadshedding across the country starting early winter.

Petroleum Minister Dr Asim Hussain confirmed to reporters on Wednesday that a gas tariff rationalisation plan would be submitted to an emergency meeting of the Economic Coordination Committee (ECC) of the cabinet on Thursday for approval.

In the absence of Finance Minister Dr Abdul Hafeez Shaikh, who is currently in the United States on holidays, Water and Power Minister Syed Naveed Qamar is expected to preside over the meeting. Prime Minister Syed Yousuf Raza Gilani is reported to have given green signal for the tariff increase during a meeting he had with the petroleum minister earlier in the day.

Authentic sources told Dawn that the petroleum ministry had recommended to the ECC to increase natural gas prices for all domestic consumers by 15 per cent, 18 per cent for industrial consumers, 36 per cent for power sector, including Wapda, KESC and independent power producers, and about 96 per cent for fertilizer feedstock for older plants.

The summary also seeks to gradually eliminate all cross-subsidies in gas tariff. Also, the prices for transport sector through compressed natural gas (CNG) would be increased to 65 per cent of petrol price from the current 45 per cent. The proposal was immediately rejected by CNG stations’ association. The sources said the overall objective of the gas price rationalization was to bring in uniformity in fuel prices and remove all subsidies so that full cost of gas was recovered from consumers.

Officials said the increased gas prices would not be notified on June 30 as required under the Oil and Gas Regulatory Authority (Ogra) law in view of a case pending with the Sindh High Court against proposed increase in prescribed prices. They said the court was expected to take up the case on July 1 and decide the matter to pave the way for Ogra to provide prescribed prices for the gas utilities that would be reflected in consumer tariff in a matter of two-three days.

Dr Asim said the government planned to increase gas rates by 10-15 per cent for domestic, 15-20 per cent for industrial and 100 per cent for fertilizer sector on the advent of the next financial year. He said the notification to this effect would be issued after the SHC disposed of the case. In what seems to be a departure from the current government policy of providing maximum gas to the province it produces, Mr. Hussain said the loadshedding this winter would be uniform in all the provinces. He said the two-day loadshedding would also be applied this winter to the CNG sector and industry in Sindh.

This change in policy, however, has a caveat. The gas saving of about 200 million cubic feet per day (MMCFD) achieved through closure to the CNG sector and industry in Sindh would be diverted to the Karachi Electric Supply Company to ensure uninterrupted electricity supply by the KESC. He said the gas contracts with four IPPs (independent power producers) were expiring on June 30 and a summary had been sent to the ECC, whether the supplies should continue or not. He added that personally he was against provision of gas to IPPs which should be run on furnace oil. He did not agree with a suggestion that gas saved in Sindh would be diverted to other provinces.

Abdullah Ghias Piracha, chairman of the All Pakistan CNG Owners Association, said the agreement to supply 152mmcfd of gas to four IPPs was ending on June 30 and the gas thus saved should now be supplied to the CNG sector to end its two weekly closures.

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