July 12, 2008	Saturday	Rajab 8, 1429

ISLAMABAD, July 11: The government has decided to reduce gas tariff for captive industrial units and regulate consumer prices of compressed natural gas (CNG) at sale points to ensure uniform rates across the country.

The decision was taken on Friday at a meeting presided over by Prime Minister Syed Yousuf Raza Gilani, on recommendations of a special committee headed by Finance Minister Syed Naveed Qamar.

However, the exact size of price reduction for captive industrial power plants would be decided by the Economic Coordination Committee (ECC) of the cabinet in Lahore.

Informed sources said the gas tariff for other categories of consumers announced by the government early this month would remain unchanged because of revenue shortfalls of gas companies, but a relief of about Rs4 billion would be provided to the captive industrial power plants out of the government revenue to meet demands of the textile industry.

The textile industry has been protesting against the 68 per cent increase in gas prices for their power plants and some textile associations have closed their units in protest to force the government to withdraw not only the hike for captive plants but also the industrial rates.

The sources said the existing Oil and Gas Regulatory Authority (Ogra) rules would be amended to empower Ogra to determine, regulate and fix CNG tariff to ensure uniformity throughout the country. To this end, the committee headed by the finance minister would provide a tariff fixation formula to Ogra on the pattern of oil prices that would determine the operating cost and a fair return on investment to CNG stations over and above the company’s sale rate.

This would practically mean that CNG rates at gas stations would be fixed by Ogra which would be uniform across the country.

Under the existing system, Ogra fixes CNG tariff for gas companies which comes to about Rs25 per unit. However, the CNG sale rates for consumers are about Rs48 per unit. This is because the CNG rates at gas stations are totally deregulated and CNG owners are free to charge their own expenses, utility costs and profit margins.

Informed sources said the decision to regulate CNG prices was taken because of the recent confusion over increase in gas rates. The committee believed that it was “total dishonesty” on the part of CNG owners to increase their rates by 13 per cent although the notification they got from the government was about eight per cent. They took advantage of the “erroneous announcement” by the petroleum minister.

The prime minister had formed a committee last week comprising ministers for finance and commerce, special assistant to the prime minister on economic affairs and secretaries of finance and petroleum to assess the situation.

The committee in its report submitted to the prime minister on Friday recommended that gas prices for captive industrial sector be revised downwards and the job of regulating CNG tariff be assigned to Ogra to check any variation in retail prices.