ISLAMABAD: The government is considering reallocating about 1.2 billion cubic feet per day (BCFD) of the fuel through wide-ranging changes in the allocation and consumption policy.
The expected policy changes include regularisation of illegal connections, ban on gas generators and fresh allocations for the transport and housing sectors.
The adjustments in gas allocation and consumption appear to have been planned to improve the financial health of the Sui Southern Gas Company and Sui Northern Gas Pipelines which are facing serious administrative and systematic challenges in controlling their system losses.
The proposed policy changes also seek to make the best use of gas consumption by existing consumers through tariff changes but in some cases appear to be giving preferential treatment to certain consumer groups.
According to sources, consultation with all the ‘stakeholders’ has been completed and the new policy is expected to be approved by Prime Minister Nawaz Sharif.
The sources said some of the changes, in principle, should have been taken care of by the Oil and Gas Regulatory Authority (Ogra) but the regulator was reluctant to take responsibility for them.
A file seeking the prime minister’s approval suggests that the government wants to regularise thousands of illegal commercial consumers and ban the use of gas-run electricity generators.
The ministry of petroleum and natural resources has proposed that all domestic gas connections being illegally used for commercial purposes should be converted into commercial connections. Such consumers would be given “low-pressure commercial connections to regularise all such connections” so as to avoid loss to gas companies because of tariff differential.
This step is crucial from the gas companies’ revenue standpoint. The domestic tariff begins from Rs106 per unit (million British Thermal Unit) and goes up to Rs530 per million BTU. The commercial tariff is Rs637 per unit and the price difference ranges between 20 per cent and 515pc.
The consumers illegally using domestic connection for commercial purposes will have no option but to regularise their activity at the higher rate.
The minimum charges for domestic connection are Rs143 per month even if there is no consumption. On the other hand, the minimum charges for commercial consumers are Rs3,821 — a difference of about 2,600 per cent.
As a consequence of these two changes, the revenue of gas utilities will increase substantially.
On top of that, the security deposit charged by the utilities will automatically increase because it is set at three-month average consumption.
GENERATORS: The petroleum ministry has proposed a ban on gas-based power generators and also on their import to discourage consumption by domestic and commercial consumers to overcome power loadshedding.
“In order to discourage gas-based generators, especially because of their low performance, a ban on import of gas generators may be imposed and import should be subject to NOC based on specific purpose of generation. It will not be allowed for captive power generation,” the proposal says.
More than 320 industrial units having captive power plants (CPPs) are currently consuming more than 100 million CFD.
FRESH CONNECTIONS: Seeking continuation of a moratorium on fresh domestic gas connections, the ministry has proposed that connections to government housing colonies and schemes may be allowed where land is owned by approved federal and provincial schemes.
The sources said the managements of defence housing societies were making efforts to be included in the list by stretching the definition of government-approved schemes and land being in the name of government entities.
TRANSPORT: The ministry has proposed that gas connection to government-owned public transport CNG projects may be provided at filling stations selected by provincial governments for providing cheap transport to the people.
This is aimed at phasing out CNG supply to private users and diverting the supply to public buses like a scheme recently revived in Karachi and a few buses used in some other cities.
Published in Dawn, September 8th, 2014
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