ISLAMABAD, July 9: The government has decided to give priority to the power sector in allocation of fresh gas supplies in view of the continuous rise in the oil import bill and the resultant increase in power tariffs.

Sources told Dawn that the decision was taken recently by the Economic Coordination Committee of the cabinet because of the increasing dependence on imported furnace oil for power generation and little progress made in the development of water and coal-based projects.

Pakistan had to pay about $13 billion on account of oil imports during the last financial year, and it is estimated to keep rising because of record oil prices in the international market. The government understands that if fresh gas arrivals are not dedicated to the power sector the oil import bill could touch $20 billion this financial year.

As a result, fresh gas supplies from new fields will not be available for domestic and commercial consumers. Under the existing petroleum policy, domestic and commercial consumers get the first priority, followed by fertiliser plants. Next on the priority list are gas supplies for independent power producers and gas utilities which have historic agreements for firm supplies, followed by the general industrial sector and compressed natural gas (CNG) stations.

Wapda, KESC and captive power plants, which did not have firm gas supply commitments, used to be on the fifth position and the cement sector was the last on the list.

The first priority now will be the power sector whenever gas supplies are available from new fields.

Likewise, gas from new fields which are not linked to the national transmission system is supplied to the fertiliser sector as a priority, followed by power companies having firm gas sale agreements. In this case too, the first priority will now be given to power plants.

At present, the power sector is the largest user of gas, accounting for a 33.5 per cent share, followed by the industrial sector with 23.8 per cent, households 18 per cent, fertiliser 15.6 per cent, transport 5.4 per cent and cement 0.9 per cent.

Last year, consumption of gas in the transport sector increased by 28 per cent, household consumption grew by12 per cent and fertiliser 3.5 per cent.

Consumption in the power sector declined by about 1.2 per cent as the previous government concentrated on providing gas connections to the domestic sector and promoting CNG for transport.

Now the government is trying to put the CNG in the back seat along with the domestic sector to make sure that maximum supplies are made available for power generation.