Use of RLNG by zero-rated export industry, CPPs: Rs 25.75 billion supplementary grant approved

The federal cabinet has approved Rs 25.75 billion supplementary grant to provide subsidy to zero-rated export-oriented industry and captive power plants (CPPs) for use of re-gasified liquefied natural gas (RLNG). The cabinet also approved a gas subsidy of Rs 5.5 billion to maintain the prices of fertilizer at current level. To minimise the price differential between imported and local LPG, the cabinet has also reduced the GST rate from 17 percent to 10 percent.
The cabinet decided that gas supply to the industrial sector [exporters of the zero-rated sectors namely textile (including jute), carpets, leather, sports and surgical goods] in Punjab will be 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.
The cabinet reversed a decision of allocating system gas to only zero-rated industry for production purposes only. Now, subsidised gas will be provided to zero-rated industry both for production purposes and electricity generation.
Previously, in view of electricity shortage, significant volume of gas was required to be consumed by the industrial sector for power generation; however, given the assured availability of electricity in the system, the subsidised gas was not allocated for captive powers.
Minister for Petroleum and Natural Resources, Ghulam Sarwar Khan said that like domestic consumers, industrial consumers are also very important for the economy of country.
M/s SNGPL will provide a subsidy calculation at $ 6.5 per MMBTU taking into account actual gas/ RLNG consumption by the 536 zero-rated industry consumers (process+ captive) old/ new i.e. 215.28 MMCFD (69.96 MMCFD for process and 145.32 MMCFD for captive) for the period after October 16, 2018. The subsidy calculation has been projected at Rs 25.75 billion up to June 2018.
At present, sufficient stock of urea is available in the country for Kharif season and the decision has been taken to give gas subsidy for urea plants for Rabi season to ensure adequate urea at current rate in the country for discouragement of those who want to make windfall profit by increasing its price at the cost of poor farmer.
The minister said that Punjab is not self-sufficient in gas productions like three provinces. The surplus natural gas produced in three provinces is provided to Punjab. "There is no other solution than to provide gas/RLNG to domestic and commercial consumers of Punjab," he said.
The matter would be discussed at the forums of parliamentary committee of Pakistan Tehreek-e-Insaf and cabinet, he said.
The minister said that gas from Turkmenistan, Afghanistan, Pakistan and India (TAPI) Gas Pipeline and Iran Pakistan (IP) Gas Pipeline and LNG from Qatar are the cheapest source of energy. "TAPI project can be constructed on fast track which is cheap source of energy and Iran is ready to negotiate IP Gas Pipeline project," he said.
The federal government is ready to renegotiate the LNG deal with Qatar if ongoing investigations into the deal by National Accountability Bureau (NAB), Federal Investigating Agency (FIA) or Supreme Court find some objectionable clauses in the agreement.
The minister said that Petroleum Division is reviewing the agreements of Rental Power Plants (RPPs) and Reko Diq projects.
The minister said that prices of domestic LPG cylinders have already come down from Rs 1,850 to Rs 1,410 by adjusting taxes on local and imported LPG. On the intervention by Oil and Gas Regulatory Authority (OGRA), the prices of LPG cylinders were further reduced to Rs 1,338, he added.
Responding to a question, the minister said, "It is the responsibility of provincial governments to implement the prices of LGP cylinders determined by the federal government."
He said the present government has discovered 105.18 mmcfd gas and 5,358 bbls p/d in Sindh and KP. The government is also working on a proposal to install LPG Air Mix Plants in AJK, Gilgit-Baltistan, Balochistan and other areas of the country, he added.