The Ministry of Petroleum and Natural Resources as per policy directives has asked the Oil and Gas Regulatory Authority (Ogra) to regulate the Liquefied Petroleum Gas (LPG) prices.
According to energy experts and Petroleum Ministry officials Pakistan's local gas production is stagnant at 4 Billion Cubic Feet per Day (BCFD), while total demand is over 8 BCFD and managed demand is estimated at 6.2 BCFD. The government is managing gas supply/situation through a gas load-management plan according to which domestic consumers are top priority followed by industrial, commercial and CNG sectors.
To meet the growing gas demand the government started importing Liquefied Natural Gas (LNG) and at present 450 Million Cubic Feet per Day (MMCFD) of LNG is being injected into the gas system which is supplied to power plants, fertiliser plants and some of the industries.
Officials said that domestic gas supply had become a political issue in the country and there was no economic rationale for domestic gas distribution saying that out of 4 BCFD of national gas production 2 BCFD was being consumed by the households which generated no economic activity.
"If we supply this amount of gas to industrial or power sector, it will end power load-shedding immediately as this amount of gas is sufficient to produce at least 10,000 Megawatts (MWs) of electricity, which is enough to end power load-shedding of all the segments of the national economy. This will enable industries to operate round the clock and generate hundreds of thousands of jobs. As a result of surrendering gas worth Rs 600 per month a normal household will get a benefit of Rs 20,000 per month due to economic activity," Professor Dr Atiq-ul-Rehman of Pakistan Institute of Development Economics said.
According to officials over the past three years the LPG consumption has witnessed a 100 percent increase as in September 2014 country's total LPG consumption was 1,600 tons a day of which 1,200 tons was local production and 400 tons imported, but since 2014 as a result of lower commodity prices the consumption has increased to 3,228 tons a day of which 1,800 tons a day is local and 1,428 tons is imported gas.
According to Ogra officials the Authority needs Cabinet's approval for implementing the CCI approved regulated price of the commodity according to which the price of 11.8 kg LPG cylinder will be fixed at Rs 900. An official of the Petroleum Ministry said the Sui-Northern Gas Pipelines Limited (SNGPL) at present was conducting a survey in Azad Kashmir, Gilgit Baltistan and other hilly areas to install LPG Air Mix plants.
Talking to Business Recorder Shahid Khan Abbasi, Minister for Petroleum said the government had no plans to replace domestic gas with LPG. He added that since 2013 the Ministry was working to compensate the natural gas use and for the purpose regulation of LPG price was approved by Council of Common Interest (CCI) in February 2016, adding the Ministry had issued policy guidelines to Ogra to issue a notification regulating LPG prices.
When asked if the cost of the projects will be passed on to the gas consumers across the country, the Minister said: "Yes it will be reflected in the tariff in the form of weighted average cost of gas and the impact of three projects has been worked out at just 32 paisas per unit which is negligible."
He said that in hilly area, massive deforestation was taking place as a result the regions were becoming more vulnerable to land sliding and devastating floods frequently endangering the existence of wild and human lives. "Using of gas through LPG Air Mix plants will help save the environment and beauty of the area as well."
The Minister explained that the cost of cylinder filled with LPG would be higher than the gas to be provided through the new initiative saying that gas through LPG Air Mix plants would be subsidised.