ISLAMABAD: The Pakistan Tehreek-e-Insaf (PTI) government has deferred increase in power and gas tariffs by three to four years due to the prevailing Covid-19 pandemic, which has badly affected the economy of the country. Talking to media persons along with Minister for Information and Broadcasting Syed Shibli Faraz, Prime Minister's Special Assistant (SAPM) on Petroleum Division Nadeem Babar shared some of the data related to power and gas sectors of the country, and sought to dispel the impression created in recent media reports.
Defending a Rs270 billion increase in energy sector circular debt he said the prime minister did not allow an increase in power tariffs which was due in January 2020 as per commitment with the International Monetary Fund (IMF) due to outbreak of Covid-19 in the country in March 2020.
Another increase which is needed to be passed on to consumers is inefficiency of DISCOs which are also causing a loss of Rs9 to 14 billion monthly.
“In case of zero circular debt by December, the government had to pass on the impact of both to consumers, however, the prime minister disallowed such action due to Covid-19,” he added.
He said the circular debt inherited from the Pakistan Muslim League-Nawaz also included a Rs146 billion budgeted amount but it was not released under industrial package; however, the industry was given a subsidy to provide industrial consumers cheap electricity.
He further said that Rs200 billion was added to circular debt on account of exchange rate.
He said the previous government had artificially overvalued the rupee and the PTI government had to bring in a real exchange rate.
He said dependence of power plants on furnace oil was brought down from 21 percent to 3.9 percent in two years of the present government.
Responding to a question, he said the federal government would not agree with the petitions filed by Sui Northern Gas Pipeline Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGCL). Through their petitions, the gas companies have sought to pass on the shortfalls of previous years, he added.
He maintained that the previous government did not allow increase in the gas tariffs, which resulted in increase in the shortfalls of companies by Rs192 billion.
He said the companies would be allowed to recover the receivables in the next four to five years in phases.
He further said that there would be no shortage of gas in the country as both the terminals were running at full capacity.
However, consumers will face low gas pressure problem in winters, he said, adding that arrangements are being made to import around 1300-1325 cubic-feet of LNG to meet domestic needs.
According to him, “the Sindh government allowed to work on 17 km gas pipeline, however, the formal approval from the provincial cabinet is not received.”
The SAPM said it is unfortunate that a negative media campaign is about LNG being run against the government through fudged statistics. He said the present government had imported 35 cargo ships of LNG in last 27 months at 20 percent low rate and as compared to LNG agreements signed by the previous government with Qatar.
“Our government imported LNG at average 10.4 percent of Brent on spot rate as compared with 13.37 percent being imported under the Qatar agreement,” he added.
Nadeem Babar said the government had also allowed the private sector to set up LNG terminals in the country, and two companies had shown their readiness to establish those facilities in Pakistan.
He said the last PML-N government had established two LNG terminals with the government's guarantee of running those facilities, inflicting a huge cost on the national exchequer.
He said the government was unable to resolve the pricing of RLNG until it was declared a gas and not a petroleum product as introduced or defined by the previous government through an act of Parliament.
Regarding K-Electric, Nadeem Babar said “LNG was provided to the power generation company in Karachi in summer just to facilitate people of the country's biggest city.”
The special assistant said work on North-South Pipeline would begin in February- March. According to him, “holistic” reforms are being introduced in the pipeline sector.
Speaking on the occasion, Syed Shibli Faraz said the government is trying to control the issues of circular debt and line losses in the energy sector.
Copyright Business Recorder, 2020
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