ISLAMABAD: Pakistan’s Minister for Petroleum Musadik Malik expressed confidence in obtaining a waiver from the United States regarding completion of the Iran-Pakistan Gas Pipeline Project.
He reiterated Pakistan’s need for Iranian gas to meet its energy demands and stressed the importance of completing the project without facing sanctions.
In an informal conversation with energy beat reporters, Malik raised serious concerns regarding the proposed hike in gas prices, terming it as unrealistic and urging for transparency in the decision-making process.
He emphasised the need for clarity on the basis for such a substantial increase.
He highlighted that the proposed gas tariff increase comprises 85 percent of the gas price and 15 percent of other costs.
He pointed out that over the past three months, neither the wellhead gas price nor the dollar exchange rate has witnessed any significant rise, raising questions about the justification for the hike.
The minister emphasized that the Oil and Gas Regulatory Authority (OGRA) will thoroughly examine the rationale behind the surge in prices as requested by the Sui companies.
It is relevant to note that the SNGPL has requested a price increase of Rs 2,646.18 per Million British Thermal Unit (MMBTU) and requested OGRA to set a new average price of Rs 4446.89, which would multiply the burden on the people already grappling with soaring rates. Sui Northern has estimated a revenue shortfall of Rs 189 billion and 18 crore. Similarly, Sui Southern Gas Company has also sent a request to OGRA for an increase of Rs 274.40/mmbtu in gas prices from July 1, 2024, and requested to fix the average gas price of Rs 1740.80/mmbtu.
The SSGC has estimated a total revenue shortfall of Rs 79.63 billion rupees in the application for the next financial year, of which Rs 56.69 billion are due to local gas and Rs 22.93 billion to RLNG.
Seeking accountability, the petroleum minister revealed that details have been requested from the boards of Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company Limited (SSGCL) to substantiate the proposed increase.
Additionally, he urged the boards to refrain from increasing salaries and other benefits for employees of the Sui companies.
Musadik Malik underscored the necessity of energy reforms for the country’s own benefit, rather than solely for compliance with IMF directives. He emphasized the importance of supplying affordable electricity to alleviate the energy crisis, noting the stark difference in production costs between LNG-generated and locally-sourced gas-generated electricity.
In response to inquiries about the implementation of sales tax on petroleum products, Minister Malik stated his lack of awareness and highlighted the pressing issue of circular debt in the energy sector, which has ballooned to Rs 5000 billion. He stressed the urgency of implementing reforms to address this growing burden.
