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No hike in gas tariff for any category of consumers

ISLAMABAD: (Parliament Times) The government has decided not to increase the natural gas tariff for any category of consumers because of a decline in the cost of gas production.

“We will neither increase the tariff for consumers nor let (gas) companies face (revenue) losses,” Petroleum Minister Shahid Khaqan Abbasi said on Thursday.

The Oil and Gas Regulatory Authority (Ogra) had recently suggested a 14 per cent increase in gas prices to meet revenue requirements of Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGCL) for 2016-17.

Mr Abbasi told Dawn the revenue requirement determined by Ogra for the gas utilities can be met through the existing consumer gas rates as per his ministry’s calculations.

Responding to a question, he said the revenue shortfall of the gas utilities will not be met through the gas development surcharge. He said current gas prices will remain unchanged for not only residential gas consumers, but also industrial, commercial, fertiliser and power-sector consumers.

Early last month, Ogra had determined higher revenue requirements for gas utilities, necessitating a 14pc average increase in the gas tariff. It had proposed no change in the gas rate for domestic consumers along with a relatively higher increase for industrial and commercial consumers.

Earlier, speaking at a news conference, the minister said domestic consumers in Punjab face 40pc gas shortages. He said the shortage in Punjab has increased following the implementation of the 18th Amendment to the Constitution. It is now binding on the government to provide more gas to the gas-producing province, he noted.

“The Council of Common Interests (CCI) needs to review this clause for the uniform gas distribution for domestic consumers in all provinces,” he said, adding that the gas shortage in Punjab this winter will be smaller than last year’s.

He said SNGPL has given gas connections to one million consumers since the current government came to power. He said the government has ensured merit while providing consumers with gas connections.

The minister said the oil and gas discovery rate has significantly improved in recent years because of better policies and efforts of the state-run companies.

The success rate in the oil and gas exploration jumped from 31pc to 55pc, he said, adding that the oil and gas exploration activity increased 40pc under the current government. He noted that 90 oil and gas discoveries were made out of 319 wells drilled as opposed to 35 discoveries made in the same period under the previous regime.

As much as 466 million cubic feet per day (mmcfd) gas from new wells entered the system besides the addition of 478mmcfd gas from existing wells during the last three years, he said.

Due to increased oil and gas exploration activities, 11,000 barrels per day oil through new discoveries along with 21,000 barrels per day oil from existing fields was also added to the system, he said.

The minister said previous governments failed to install a processing plant at Kunar Pasakhi Deep field for the last 10 years. But thanks to Oil and Gas Development Company (OGDC), a plant has now been installed that will bring 80mmcfd additional gas, 400 tonnes of LPG and 4,000 barrels per day oil in the winter.

He said the federal government has reached an agreement with the Khyber Pakhtunkhwa government to legalise the illegal gas connections to reduce losses.

He said gas companies will provide 60pc funding whereas KP will provide the rest of money for this purpose.

He said the second LNG terminal will be functional by June 2017 to handle 600mmcfd LNG.

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