ISLAMABAD: A parliamentary panel, on Thursday, was apprised that the Pakistan State Oil (PSO) with 50 percent market share in petroleum products’ sale has invited bids for additional supply of diesel to avert diesel shortage in harvesting season.
The Senate Standing Committee on Petroleum expressed apprehension that in the near future the country will face a severe diesel crisis and advised that the government should take timely measures to prevent any such crisis.
The committee was informed that 26 days’ stock is already available and stock for the next month is also secured.
The chairman committee lamented the fact that PARCO and Attock oil refineries do not supply diesel and all the onus is on the PSO for the supply of diesel.
The chairman committee recommended sharing the burden of PSO for the supply of diesel and taking practical steps to resolve the issue of the shortage of high speed diesel as the harvesting season is fast approaching.
The ministry officials apprised the committee that in order to avert any shortage in the market it needs to give confidence to the OMCs that the price differential shall be promptly paid. The committee was also informed that expected PDC for 1-15th March is Rs883 million rupees; however, in subsequent fortnights it is expected to be around Rs30 billion rupees depending upon international oil prices.
The committee observed the government is giving Rs20-22 billion in the shape of cross subsidy annually. 19 percent gas consumption by fertilisers and 21percent gas by the Power Division is also consumed annually.
The committee received a comprehensive briefing from the Ministry of Energy (Petroleum Division) on the government’s strategy and plans to handle the oil import and prices in the current scenario of Russia-Ukraine Conflict.
The Committee was apprised that the prime minister announced a relief package on 28th February 2022. There will be a reduction in the consumer price of Motor Spirit (MS) and High Speed Diesel (HSD) by Rs10 per litre. It has also been committed to keep the prices stable till the end of the fiscal year. Petroleum Levy will be Rs1.81/liter on Motor Spirit and zero on HSD.
The committee was also informed that price differential of Rs2.28/liter on HSD will be paid to the oil marketing companies/ refineries.
It was also informed that the OMC’s refineries may need higher working capital limits on account of Price Differential Claims (PDC).
The committee was informed that the mitigation efforts also include the ECC approved budget of Rs20 billion with quick mechanism to pay PDC to OMCs/ refineries through OGRA and PSO within seven days after each fortnight.
A total of five cargoes of 27, through long-term G2G supplier –Kuwait Petroleum Corporation - are expected in March and the remaining in April this year.
The Senate Standing Committee also discussed the plans of the government to reduce and pay–off the circular debt in gas sector at length.
The ministry lamented that the companies are a victim of government’s policy to subsidize gas.
The committee was briefed that the new laws have been enacted empowering the OGRA to notify the sale price already determined if the governments does not give timely advise on the prices within a period of 40 days.
The new law has also enabled the ORGA to revise the gas prices.
The average consumer price in 2021 was Rs314 (selling price) at a cost of Rs758.
The committee was informed that sales prices are not proportionally revised, resulting in rising differential.
The increasing domestic gas consumer’s share resulted in lower cross subsidisation by higher paying sectors.
The ministry briefed that circular debt (CD) is the outcome of policy choices by the GoP through sub-optimal cross subsidization.
The GoP cannot keep both industry and domestic sector happy at the same time.
The chairman committee proposed recommendations that the CNG import should be allowed by either the PLL or the CNG private stakeholders, themselves, rather than the government through the process of diversions, so that the burden on the government in the supply of gas can be shared and the issue of circular debt can also be resolved.
The committee was also briefed on the reasons for reduction in PLL’s Quantum of LNG imports including the unprecedented high spot market prices.
The committee was briefed that the PPL received approximately 143 billion rupees.
Other reasons include problems related to credit security limitations and non-supply by term suppliers, the ministry informed.
Senate Committee on Petroleum took up the issue of provision of gas facility to Sirikot, Tehsil Ghazi, district Haripur. The committee was informed that supply of gas to union council Sirikot was approved by the federal cabinet and the required government funding (direct) was credited in Assignment Account during 2018, but the work on the project could not commence in wake of general elections and the funds lapsed by the end of the financial year.
The fresh cost is estimated for supply of gas to union council Sirikot, District Haripur based on unit construction cost at 1,607.285 million rupees. The ministry informed that the government is reviewing expansion in domestic sector, improvement in gas supplies and removal of pricing distortion.
Matters pertaining to the oil and gas fields, wherein, section-4 has not been imposed, and details of acquisition of land and rent being paid to the land owners in Balochistan were presented.
Senator Sabir Shah raised question as to how can any private individual who does not legally own any land is charging rent to a state-owned firm.
The committee was briefed that in Balochistan, all land acquisition by Mari Petroleum Company Limited (MPCL) for its projects is done under section 161 of Balochistan Land Revenue Act, 1967 and that there is no land directly leased to landowners.
The chairman committee directed that chief secretaries be summoned on the issue and the concerned deputy commissioners should brief the committee on the matter.
The issue of gas load-shedding, licensing and non–establishment of LPG plants in Panjgur, raised by Senator Danesh Kumar was considered in detail.
The committee was apprised that there is no ban on construction/ installation of LPG plants all over Pakistan and licenses are being granted, to each and every applicant who fulfils requirement of Mineral and Industrial Gases Safety Rules, 2010.
The committee was also briefed that the SSGCL is trying its level best to serve all its consumers to the best of its ability prioritizing domestic sector despite, depletion in indigenous gas supplies by nine pc per annum.
The committee was also informed that the Economic Coordination Committee of the Cabinet (ECC) on 26th March 2020 had decided to shelve the installation of all LPG Air Mix Plants including the one in Panjgur.
Copyright Business Recorder, 2022
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