The government has delayed the decision to increase tariff for CNG domestic and industrial sectors following mounting pressure from all political parties, officials said. Officials in the Ministry of Petroleum told Business Recorder that on June 30 the Ministry had sent a summary to the Economic Co-ordination Committee of the Cabinet (ECC) for approval of new gas tariff for all sectors.
But the ECC meeting, chaired by Federal Minister for Water and Power Naveed Qammar did not approve it, saying that it would result in widespread agitation against the government. "The Petroleum Ministry wants to end distortion in gas prices, and proposed an increase in gas tariff from 10 percent to 100 percent for all sectors. However, the ECC agreed to increase gas tariff only for fertiliser sector, by 13.5 percent," officials said. They added that the issue would be taken up with the Prime Minister and the Cabinet for formal approval.
On June 29, 2011 Minister for Petroleum Dr Asim Hussain, talking to a group of journalists, had said that the government intended to increase gas prices for CNG sector by 15 percent, domestic consumers by 15 percent, industrial sector by 15-20 percent, and fertiliser sector by 100 percent, in a bid to reduce mounting circular debt and subsidies.
The Oil and Gas Regulatory Authority (Orga) had suggested to the government to increase gas tariff for all the sectors by 13.5 percent, but the Petroleum Ministry proposed to end subsidies for fertiliser and other sectors in one go. Therefore, the Ministry proposed higher tariff increase, officials added.
Some Ministers in ECC meeting said that increasing gas price for domestic and CNG sectors by 15 was not possible at the present time and compelled the Minister to forward it to the Prime Minister. Sources said that during the meeting of ECC on June 30, some Ministers had opposed increase in prices for CNG outlets and fertiliser plants. However, the government silently approved the recommendation of Oil and Gas Regulatory Authority (Ogra) to increase the gas price for fertiliser sector by 13.5 percent, sources added.
It had also proposed setting the price of compressed natural gas (CNG) to 65 percent of petrol price. At present, CNG price stands at 50 percent of petrol price.
Fertiliser factories are paying Rs 59.28 to Rs 102.01 per million British thermal Unit (mmbtu) for gas being used as feedstock in Sui Northern Gas Pipelines Limited's (SNGPL) system. Commercial consumers are paying Rs 563.76 per mmbtu, CNG Rs 503.63 per mmbtu, industrial consumers Rs382.37 per mmbtu and power plants Rs332.36 to Rs980.61 per mmbtu.
"If power plants and other consumers are paying higher prices for gas, then why should not the fertiliser manufacturers pay the same price?" the official said, adding that the idea behind the increase in gas price for fertiliser units by 100 percent was to bring it on par with prices paid by other consumers.
Sources stressed that old fertiliser plants had benefited from cheaper gas supply and the subsidy could not continue for long as different sectors, particularly textile were protesting against these concessions.