Center, Sindh at loggerheads over proposed gas pricing formula

ISLAMABAD: The federal government and the Sindh government are at loggerheads over the proposal to include the price of imported LNG in the average weighted cost of gas (WACOG) for Sindh.

The differences between the two (centre and Sindh) emerged after a claim of Special Assistant to Prime Minister on Petroleum Nadeem Babar that Sindh Chief Minister Syed Murad Ali Shah had “agreed” to the inclusion of RLNG in the WACOG formula of local natural gas during the last meeting of the Council of Common Interests (CCI).

The Sindh CM, in a letter to the prime minister on January 8, had termed the claim as “very disturbing”, saying it had created unrest amongst the people of Sindh as this news was carried in the national press.

CM Murad had also requested the PM to stop Nadeem Babar from any attempt to include RLNG into existing WACOG formula for tariff determination and to ensure supply of locally produced natural gas to consumers in Sindh as per demand and as per their constitutional right.

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He held that Sindh was producing more gas than what it was receiving as its share.

“As per the constitution, Sindh has the first right to use the gas which it produces. Moreover, it is beyond common sense that Sindh should buy expensive gas when it has been producing cheaper gas,” he added.

Meanwhile, the Petroleum Division, while responding to the Sindh CM on Friday, said that the federal government would wish to uphold the positive spirit of CCI meeting wherein it was mutually agreed to reach decisions on the distribution of gas to Sindh in a collaborative manner.

“It is therefore in the interest of Sindh and not just the federation, to arrive at a mutually agreed structure for supplies, distribution & pricing of natural gas in any form to ensure uninterrupted supplies to the country,” said a Petroleum Division’s rejoinder.

“During the CCI meeting on December 23, 2019, both the SAPM and the Sindh chief minister had agreed to categorise LNG as gas and the subsequent jurisdiction of OGRA to determine its price; they had also agreed to the SAPM’s visit to Karachi, subject to CM Sindh’s availability, to discuss the subject of WACOG, gas distribution and pricing through constructive discussions.”

The Petroleum Division clarified that it neither rejected the Sindh government’s demand that ‘gas needs of the province should be fulfilled first’ nor was such a recommendation ever under consideration.

According to the rejoinder, gas discovered in Sindh has always been allocated to the Sui Southern Gas Company under the present government’s tenure.

“The reporting of SAPM’s interpretation of Article-158 was also misconstrued during the CCI meeting. According to the SAPM, the citizens of Pakistan (not any particular province) have the first right of use given that citizens are the ultimate owners of this resource,” the rejoinder read. “Any use beyond domestic consumers needs to be decided amicably between federation and provinces under Article-158.”

The Petroleum Division also highlighted that Sindh has been producing approximately 2,243 Million Cubic Feet per Day (MMCFD). Out of the total, 1,200-1,300 MMCFD was being put in the SSGC system while approximately 700MMCFD was being provided directly to the power and fertiliser sectors in Sindh.

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Ahmad Ahmadani
The author is an investigative journalist. He can be reached at [email protected]
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