Govt says increasing gas prices inevitable

ISLAMABAD: The government on Monday told a parliamentary panel that the two state-run gas distribution companies would go bankrupt if the gas prices were not increased. Especially, the Oil and Gas Regulatory Authority’s new rules limit the power of the federal government to cap its prices so it becomes inevitable now.

Minister of State for Petroleum Musadik Malik said this while briefing the Senate Standing Committee on Petroleum that met here with Senator Abdul Qadir in the Chair. He said the government didn’t have enough money to buy expensive gas and provide it at cheaper rates to consumers and added that the assets and profit of Sui gas companies were decreasing and if they (SNGPL, SSGC) continued to work in this manner, they would go bankrupt. He said that after an amendment to OGRA rules, the government’s powers to control the gas tariff were limited.

The secretary Petroleum informed the committee that the gas sector circular debt has reached Rs 1,500 billion.

The committee chairman inquired what the criteria for fixing gas prices and its distribution was. He was of the view that domestic consumers should be given priority in that regard. Domestic users should be charged at affordable rates and industrial units as per the sector concerned. The CNG sector should be allowed to import gas on its own to reduce the burden on the government. The gas distribution should be prioritized sector-wise, he said and added the direct subsidy to the fertilizer industry was not sustainable.

Senator Abdul Qadir expressed his reservations about the mounting circular debt which currently stood at Rs 1,500 billion. He stressed the need to find a permanent solution to this recurring problem.

Musadik told the committee that there was no MoU regarding the purchase of cheaper fuel from Russia. The committee also discussed the relevant rules which allow oil marketing companies to mix high octane blending component (HOBC97).

Musadik told the committee that the ministry only regularized those products which were utilized by the masses at a large scale like RON92 and HOBC97 did not fall in this category. Qadir advised the ministry to at least check the authenticity of this new product.