State-owned petroleum companies’ circular debt: Committee meeting to work out modalities tomorrow

ISLAMABAD: A parliamentary panel on Wednesday was informed that a committee constituted by the Economic Coordination Committee (ECC) has scheduled to meet on Friday to work out modalities for bringing out state-owned petroleum companies from growing circular debt. The Public Accounts Committee (PAC) met under Chairman Rana Tanveer.

The audit report of Petroleum Division and the Oil and Gas Regulatory Authority (OGRA) for audit year 2019-2020 was examined. Secretary Petroleum Mian Asad Hayaud Din informed members committee that the ECC constituted a committee, which would deliberate on five options to reduce the growing oil and gas sector circular debt including an option of weighted average gas price formula across the country.

On November 4, 2020, the ECC formed a committee with representation from all relevant stakeholders, including the ministries of finance, power, petroleum and planning, the Securities and Exchange Commission of Pakistan, the Oil and Gas Regulatory Authority, the OGDCL, the PSO, the SNGPL, the PPL, the GHPL, and the PLL; to prepare a proposal on modalities for clearing the circular debt of the petroleum entities.

The secretary further apprised the committee that a gas load management plan had been prepared to bridge the estimated 250 mmcfd shortfall in current winter. He said a meeting had been convened to finalize the load plan. At present, he said two LNG terminals of 650 mmcfd and 698 mmcfd capacities were running at 1,200 mmcfd capacities, and additional gas was available for the winter. Another terminal of capacity of 750 mmcfd and 900 mmcfd would be completed soon which would further enhance the capacity of RLNG.

Ameen Rajput, managing director Sui Southern Gas Company informed the committee that 17 km gas pipeline from Port Qasim to the SSGCL system would be completed by December 15 and additional 150 mmcfd RLNG would be pumped in the system, which would help to meet the gas shortage in Sindh. The committee was further informed that the gas consumers would receive 25 percent costly gas as there was no other long-term option than to implement weighted average price formula to meet the gas deficit through imported gas.

The implementation of formula required an amendment in OGRA Ordinance where LNG treated as petroleum product. The RLNG would be available at Rs800 mmbtu to Rs900 per mmbtu, against the current average rate 628 per mmbtu for domestic gas consumers of the Sui Northern Gas Pipeline Ltd (SNGPL) in case the formula is implemented. At present, RLNG consumers receiving RLNG in winter were also availing ring fence arrangements.

Managing Director SNGPL Amer Tufail said the gas shortages would not be overcome unless a dedicated pipeline would be laid for RLNG supply. “We are facing constrain due to pipeline capacity in winter for smooth supply of gas,” he said.

The secretary petroleum said that a discussion on North South Gas Pipeline Project was undertaken with a visiting technical team from Russia. It would help to deliver 1.6 bcf gases from Karachi to Lahore in estimated two to three years, he added. The secretary petroleum assured the committee that early decision of supplying RLNG to fresh domestic consumers in winter would be taken for cabinet review as per directives of the committee.

The chairman committee had asked the Petroleum Division to work to put a comprehensive plan to supply RLNG to domestic consumers at the price of system gas. He said new housing societies had middle-class consumers and should be given relief. The chairman committee also directed the officials of both Sui gas companies to improve its capacity to complete gas schemes of member parliamentarians in time to save extra financial cost. The committee was informed that the SSGCL failed to complete the gas scheme in some areas, where they received 100 percent funds.

Copyright Business Recorder, 2020