The World Bank has urged Pakistan government to rationalise gas pricing mechanism to end disparity between the price of natural gas and liquefied petroleum gas (LPG), Business Recorder has learnt. The government is currently providing cross subsidy on natural gas, which has greatly upset textile and other industrial sectors.
"The World Bank wants to rationalise by ending cross subsidy in gas sector," sources said, adding that natural gas is available in cities and therefore the government is providing incentives to well-off people through cross subsidy. Sources said that LPG is available in remote areas of the country where it is being sold at high rates due to trade monopoly.
"Both natural gas and LPG are locally produced but the government is following dual policy," sources said, adding that natural gas is a regulated product whereas LPG is a de-regulated product. A subcommittee of Ministry of Petroleum and Natural Resources, led by Barjees Tahir, has expressed serious concern over de-regulation policy of LPG price, which has led to manipulation of LPG price by unscrupulous producers.
"The price of all other products, including compressed natural gas (CNG) and petroleum products are being regulated to stabilise their price in the market and yet LPG is out of the regulated mechanism," Barjees questioned Ogra. Friends of Democratic Pakistan (FoDP)'s energy sector task force in its recent report recommended that Ogra should rationalise and restructure gas tariffs to recover supply and distribution costs (including imported energy to meet gas deficits) and to minimise cross subsidies across various sectors to enhance economic growth.
FoDP also urged the government to implement measures to reduce unaccounted -or gas (UFG) as current levels are in the high range of 7 percent to 9 percent. One percentage point of UFG means a loss of Rs 3.5 billion/year at the current average gas price.