Exporters of five zero-rated sectors: ECC may raise ratio of system gas, RLNG today

The Economic Coordination Committee (ECC) which is scheduled to meet on Tuesday will likely to increase the ratio of system gas and imported RLNG to five zero rated industry by 50:50 percent for two months at the expense of domestic consumers.
According to a summary of Ministry of Petroleum submitted to the ECC for consideration, gas supply to the industrial sector (exporters of five zero rated sectors namely: textile, leather, sports and surgical goods in Punjab will likely to revised from 28:72 to 50:50 for domestic gas and RLNG, respectively. The weighted average gas tariff of such consumers shall be $6.5 per mmbtu. However, gas price of similar consumers of SSGC and those of SNGPL in Khyber Pakhtunkhwa will remain unchanged.
M/s SNGPL has reported that currently approximately 84 mmcfd system gas representing 28 percent of sanctioned load is being supplied whereas rest of the requirement is made up with RLNG supplies at Ogra notified tariff to zero rated industry in Punjab. The system gas being supplied to zero rated industry will not be available during winter month (December 2018 to February 2019) owing to anticipated increase in consumption of gas in domestic and commercial sectors. The indigenous gas demand and supply position of the SNGP system depicts a shortfall of 211 mmcfd, 314 mmcfd, 518 mmcfd, 168 mmcfd and 144 mmcfd starting from November 2018 to March 2019, respectively.
The anticipated supply of system gas as 50 percent will be 150 mmcfd and 50 as RLNG will be 150 mmcfd making a total 300 mmcfd as per the demand of the industry. However, given the above gas demand and supply position with carried shortfall of gas till March 2019 there will hardly be any additional indigenous gas available to supply zero rated industry. Nonetheless, 300 mmcfd RLNG can be made available to zero rated industry during the month of December 2018 to February 2019 which would required differential subsidy of Rs 21,551 billion. Similarly, during the summer period March 2019 to November 2019 for supply of blend of system gas and RLNG in the ratio of 28:72 a subsidy of Rs 41.794 billion will be required.