May 6, 2003	Tuesday	Rabi-ul-Awwal 3, 1424

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ISLAMABAD, May 5: The government on Monday assured the World Bank that it would increase the gas tariff for residential consumers but the timing for announcing the increase would be decided by the prime minister.

The government, however, refused to empower the Oil and Gas Regulatory Authority (OGRA) to determine the consumer gas prices as demanded by the bank and denied any official interference in the business of Liquefied Petroleum Gas (LPG).

“We stand by the commitment (on biannual gas price increase)”, secretary petroleum M. Abdullah Yousaf told the visiting petroleum sector review mission of the World Bank.

An official who attended the meeting with the bank’s review mission here on Monday told Dawn that the government admitted that there was a delay in the implementation of the gas price increase that was due in March, but it was not backtracking from its commitment.

The Bank was told that “a summary for gas price increase has been put up to the prime minister and an approval was awaited”, the official said. He said the government was committed to completely eliminate the subsidy on natural gas in a phased manner by 2005.

Under an agreement with the World Bank, the government has to increase the gas tariff between 10 to 16 per cent after every six months for domestic sector which it believed was subsidised to the extent of 130 per cent.

The government has also agreed to bring the price of gas being produced from Sui by Pakistan Petroleum Limited (PPL) at par with other fields being operated by the foreign companies by 2007. This would effect all the consumer categories of Sui gas which is up to 300 per cent cheaper than the new fields.

The sources said that the review mission expressed very specific concern on government’s alleged interference in the pricing mechanism of the LPG business although the LPG sector already stands deregulated.

“The secretary (petroleum) laid to rest the bank’s concern over meddling in the LPG affairs and told them that the market forces were deciding everything about this sector”, the official quoted Mr Yousaf as telling the mission.

The bank proposed that OGRA should be strengthened to the level of independence enjoyed by the National Electric Power Regulatory Authority (Nepra) and be empowered to determine the consumer gas prices.

The government team, however, responded that the Nepra’s situation was different because OGRA Act did not permit consumer price determination by OGRA and as such law should not be changed.

The World Bank team also expressed concern over the handling of petroleum prices by the Oil Companies Advisory Committee (OCAC) saying “its pricing mechanism is not objective”.

Mr Yousaf defended the mechanism saying that it was quite open and transparent.