Devising GDS formula for new NFC award: Committee to access expected gas price hike impact on consumers

The National Finance Commission''s (NFC) Sub-Committee, which has been entrusted with the task of working out new Gas Development Surcharge (GDS) formula, decided on Saturday to assess the impact of expected hike in gas prices on all categories of consumers.
The Sub-Committee working out new GDS formula met here on Saturday in Ministry of Petroleum and Natural Resources and discussed different options submitted by provinces ie Sindh, Balochistan and North West Frontier Province (NWFP). Haji Adeel, private member of NFC from NWFP, told Business Recorder that efforts are underway to chalk out a new GDS formula under which Sindh will face no loss and other provinces would be compensated equitably.
He informed that NWFP has proposed its own GDS formula to NFC Sub-Committee based on clubbing gas royalty with gas development surcharge and its multiplication with per Million British Thermal Unit (BTU) gas produced. The amount realised through this formula should be distributed among the provinces, he added. The meeting was informed that Sindh is producing 72 percent of total gas, Balochistan 22 percent and remaining 6 percent gas is being produced by NWFP and Punjab.
According to the official sources, GDS issue is mainly among the two provinces of Sindh and Balochistan. However, in near future NWFP is going to emerge as big gas producing province. "This is why it is keen in devising new GDS formula to safeguard its interests", the sources added. Next meeting of the Sub-Committee has been convened at Islamabad on Friday where the impact of new GDS formula on consumers would be examined.
Balochistan has demanded in its presentation to abandon the existing proportionate gas cost production formula to determine the GDS and demanded that it should be based on 50 percent on proportionate gas cost production and 50 percent on GDS production based on (weighted average well head price of the province and weighted average sale price.)
Sources said that during the meeting the main stakeholder, Sindh, in its presentation proposed and demanded that under NFC, it should be given GDS proceeds originated from three main gas fields like Kundkot Gas Filed and Mari Gas Filed located in the Sindh province and Ouch Gas Filed located in Balochistan province should go to the respective province. GDS from these three main gas sources, which are not linked to national gas distribution system, should not be distributed among all provinces and it should remain the exclusive right of both provinces, the sources added.