Gas consumers to bear extra cost of new gas supply schemes

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ISLAMABAD: The federal government’s proposal to provinces of bearing cost of new gas supply projects near gas fields has been rejected outright, which could result in consumers paying the cost for these schemes in shape of higher tariffs.

This issue was taken up during a meeting of Council of Common Interests (CCI) last month and was attended by chief ministers of all provinces, reported an English daily.

Hence, the provincial and federal governments have decided in principle to pass on the cost of billions of rupees to gas consumers with an increased tariff.

The proposal about consumer cost criteria being revised before tabling cost-sharing idea with the provinces was supported by Punjab province.

In mid-October, it was reported natural gas consumers living within 5km vicinity of gas fields in all four provinces would be subjected to a uniform costing criterion, the federal government then decided.

This additional cost was to be borne by the federal government itself from funds allocated for projects under the Public-Sector Development Programme.

Originally, the federal government had wanted all three provinces to meet the cost of Balochistan through a uniform rate to compensate for providing gas to the national system for decades, said a government official.

Consequently, gas producing entities faced hiccups in exploration work and gas theft near these fields was said to be rising, especially in Khyber-Pakhtunkhwa (KP). Now, Sui Southern Gas Company Ltd (SSGC) and Sui Northern Gas Pipelines Ltd (SNGPL) will bear the expense, which will be recoverable via consumer tariff adjustment.

CCI agreed to revising cost of a new gas connection which currently in Khyber-Pakhtunkhwa is Rs108,000, Rs207,000 in Balochistan and Rs54,000 in Sindh and Punjab respectively.

Provinces would submit their suggestions to Petroleum Division for preparation of consolidated report for the CCI to review. Punjab, Balochistan, KP and Sindh outright rejected to pay for the cost of new gas supply schemes near producing fields and demanded govt to release the entire funding.

Funds allocation under Public-Sector Development Programme (PSDP) for new gas schemes had been halted recently by the federal government. KP and Balochistan suggested gas utilities should bear cost of new gas supply schemes, whereas Sindh believed the federal government should be footing the bill.

The final decision will be taken by Oil and Gas Regulatory Authority. Petroleum Division proposed gas utilities would try supplying gas from their system to areas near producing fields where reserves were depleting.

Also, it suggested legalizing illegal network cost could be borne both by the center and KP, which the latter did not agree too.