Petroleum Division briefs the Senate Committee on Oil, Petroleum, Gas Plans and Strategies to handle Imports, Supplies and Pricing in the current scenario of Russia-Ukraine Conflict
Senate Standing committee on Petroleum recommends the Import of CNG through Private Stake holders in order to resolve the issue of CNG shortage and Circular Debt
Senate Standing Committee on Petroleum on Thursday expressed apprehension that in the near future the country will face a severe diesel crisis and advised that the government should take timely measures to prevent any such crisis. The committee was informed that 26 days stock is already available and stock for the next month is also secured. The chairman committee lamented the fact that PARCO and Attock oil refineries do not supply diesel and all the onus is on the Pakistan State Oil for the supply of diesel. The Chairman Committee recommended sharing the burden of PSO for the supply of diesel and taking practical steps to resolve the issue of the shortage of High Speed Diesel as the harvesting season is fast approaching. The Ministry officials apprised the committee that in order to avert any shortage in the market confidence needs to be given to OMCs that the price differential shall be promptly paid. The committee was also informed that expected PDC for 1-15th March is Rs. 883 million rupees, however in subsequent fortnights; it is expected to be around Rs. 30 Billion rupees depending upon international oil prices. The consumer price for oil is expected to be 28 rs /liter by the end of march, however the prices will balance down in April, the ministry informed.
The committee observed the the government is giving 20 -22 arab in the shape of cross subsidy annually. 19 pc gas consumtion by fertilizers and 21pc gas by power division is also consumed annually.
The committee received a comprehensive briefing from the Ministry of Energy (Petroleum Division) on the Government’s strategy and plans to handle the oil import and prices in the current scenario of Russia-Ukraine Conflict. The Committee was apprised that the Prime Minister announced a relief package on 28th February 2022. There will be a reduction in the consumer price of Motor Spirit (MS) and High Speed Diesel (HSD) by Rs. 10 per liter. It has also been committed to keep the prices stable till the end of the fiscal year. Petroleum Levy will be Rs. 1.81/liter on Motor Spirit and zero on High Speed Diesel. The committee was also informed that price differential of Rs. 2.28/liter on HSD will be paid to the Oil Marketing Companies / Refineries.
It was also informed that the OMC’s ‘Refineries may need higher working capital limits on account of Price Differential. The committee was informed that the mitigation efforts also include the ECC approved budget of Rs 20 billion with quick mechanism to pay PDC to OMCs/Refineries through OGRA and PSO within seven days after each fortnight. A total of five cargoes of 27, MT through its long term G2G supplier –Kuwait Petroleum Corporation are expected in March and the remaining in April this year.
The Senate Standing Committee also discussed the Plans of Government to reduce and pay –off the circular debt in gas sector at length. The Ministry lamented that the companies are a victim of Government’s Policy to subsidize gas. The committee was briefed that the new laws have been enacted empowering the OGRA to notify the sale price already determined if the governments does not give timely advise on the prices within a period of 40 days. The new law has also enabled ORGA to revise the gas prices. The average consumer price in 2021 was RS 314(selling price) at a cost of 758 RS. The committee was informed that sales prices are not proportionally revised resulting in rising differential. The increasing domestic gas consumer’s share resulted in lower cross subsidization by higher paying sectors. Sui companies have been directed not to issue any further household connections to tackle rising GDS and shortage of gas in the country. The committee was informed that the gas chain differential margin (GSD + LNG diversion) is growing at a much faster pace than the power chain circular debt ( growth of 18 times in 5 years vs 3.3 times in power circular debt). Besides, the percentage of GDS / LNG to power sector circular debt grew from 5 pc 29 pc. It was apprised that the Gas differential and RLNG diversion grew by 4 times in 3 years. The Ministry suggested that price revision is essential to contain further accumulation. The Ministry briefed that circular Debt (CD) is the outcome of policy choices by the GoP through sub-optimal cross subsidization. GoP cannot keep both industry and domestic sector happy at the same time. The chairman committee proposed recommendations that the CNG import should be allowed by either the PLL or the CNG private stake holders themselves rather than the government through the process of diversions, so that the burden on the Government in the supply of gas can be shared and the issue of circular debt can also be resolved.
The committee was also briefed on the reasons for reduction in PLL’s Quantum of LNG imports including the unprecedented High spot market prices. The committee was briefed that the PPL received approx. 143 Billion rupees. Other reasons include problems related to credit security limitations and non-supply by term suppliers, the ministry informed
Senate Committee on Petroleum Raises Issues of Public Importance of Gas-load shedding and Non-Establishment of LPG plants
Senate Committee on Petroleum took up the issue of provision of gas facility to Sirikot, Tehsil Ghazi, district Haripur. The committee was informed that supply of gas to union council Sirikot was approved by the Federal Cabinet and the required Government Funding (direct) was credited in Assignment Account during 2018, but the work on the project could not commence in wake of General elections and the funds lapsed by the end of the financial year. The fresh cost is estimated for supply of gas to union council Sirikot, District Haripur based on unit construction cost at 1607.285 million rupees. The Ministry informed that the Government is reviewing expansion in domestic sector, improvement in gas supplies and removal of pricing distortion.
Matter pertaining to the oil and gas fields wherein section-4 has not been imposed, and details of acquisition of land and rent being paid to the land owners in Balochistan were presented. Senator Sabir shah raised question as to how can any private individual who does not legally own any land is charging rent to a state owned firm. The committee was briefed that in Balochistan Province, all land acquisition by Mari Petroleum Company Limited MPCL for its projects is done under section 161 of Balochistan Land Revenue Act, 1967 and that there is no land directly leased to landowners. The Chairman Committee directed that chief secretaries be summoned on the issue and the concerned deputy commissioners should brief the committee on the matter.
The issue of gas load-shedding licensing and non –establishment of LPG Plants in Panjgor, raised by Senator Danesh Kumar was considered in detail. The committee was apprised that there is no ban on construction/installation of LPG plants all over Pakistan and licenses are being granted, to each and every applicant who fulfills requirement of Mineral and Industrial Gases Safety Rules 2010. The committee was also briefed that SSGCL is trying its level best to serve all its consumers to the best of its ability prioritizing domestic sector despite depletion in indigenous gas supplies by 9 pc per annum. The committee was also informed that the Economic Coordination Committee of the Cabinet (ECC) on 26th March 2020 had decided to shelve the installation of all LPG Air Mix Plants including the one in Panjgor.
The meeting was attended by Senators, Fida Muhammad, Mohsin Aziz, Aon Abbas, Prince Ahmed Omer Ahmedzai, Sarfaraz Ahmed Bugti, Saadia Abbasi, Atta ur Rehman, Shammim Afridi , Saifullah Abro and Senator Syed Muhammad Sabir Shah. Officials from the Ministry of Petroleum Division, Chairman OGRA, OGDCL, Pakistan State Oil, SSGCL and PCL were also in attendance.