ISLAMABAD: The Economic Coordination Committee (ECC), scheduled to meet on Wednesday, will take up the matter of reviewing the LPG extraction deal between JJVL and the Sui Southern Gas Company Limited (SSGC), Asad Hayauddin, federal secretary Ministry of Energy (Petroleum Division) said while briefing the parliamentary panel Monday. Asad said that the ECC would be reviewing the JJVL matter on Wednesday.
He added that the LPG was part of the national energy security plan and that disparities between the pricing structure of local LPG production, and the LPG imports were being ironed out by a special committee led by the deputy chairman of the Planning Commission.
The Senate Standing Committee on Petroleum directed the Sui Southern Gas Company Limited (SSGC) on Monday to review its decision and restart local LPG production in the national interest.
The SSGC stopped gas supplies to Jamshoro Joint Venture Limited (JJVL) on June 21, 2020.
As a result, some 9,000 metric tons of LPG, and 4,000 metric tons of NGL has disappeared from the market, leading to price volatility and an additional burden on the current account deficit from imports, which will cost an estimated $50 million this year. "SSGC must review and revisit its decision keeping in mind the full utilisation of national assets and local resources in the national interest," said Senator Mohsin Aziz, chairman of the Senate Standing Committee.
"SSGC is a national flag carrier in the oil and gas sector and has a responsibility to consumers." The JJVL, commissioned in 2005, has provided the SSGC with an income of Rs84 billion since then, and a profit of over Rs29 billion without any investment on the part of the SSGC, JJVL Director Fasih Ahmed told the committee.
"JJVL serves the energy requirements of 750,000 households nationwide and has created 5,000 direct and indirect jobs," he said. "Over 15 years, it has paid Rs19 billion in taxes, had export earnings of $261 million, and yielded $1 billion in foreign exchange savings through import substitution."
Committee member Senator Taj Afridi strongly urged restarting local LPG production at the JJVL to improve the investment climate in the country and to ensure energy security. He said that sales tax was 17 percent on local LPG production and 10 percent on LPG imports, and asked the Ministry of Energy to provide a level playing field to all the investors.
Irfan Khokhar, chairman of the LPG Distributors Association, said the decision to restart local LPG production would serve the national interest and facilitate reduction of consumer prices. The SSGC representatives at the hearing said it was a government decision to halt local LPG production, since most of the directors on the SSGC board were nominees of the government.
Copyright Business Recorder, 2020