ISLAMABAD: Amid continuing consultations on ways to avoid gas price hike, the government on Tuesday decided to provide at least 358 million cubic feet per day (mmcfd) of natural gas to the industrial sector in winter without affecting residential consumers in Punjab.

In a meeting, Finance Minister Ishaq Dar and Petroleum Minister Shahid Khaqan Abbasi exchanged views on at least three proposals that could ensure no increase in gas prices as desired by the prime minister.

Assisted by federal secretaries and senior officials of the two ministries, the two ministers agreed that more homework was needed to be done to crystallise a workable solution to continue with gas price freeze without negatively impacting the gas companies, informed sources told Dawn.

Industrial sector to get 358mmcfd of natural gas in winter

The sources said the government was finding it politically challenging to raise gas prices ahead of peak winter when it would be struggling to meet gas demand. “Higher price of gas along with shortages is unaffordable,” said an official.

Therefore, the gas regulator would be persuaded to linger on with the gas price for a couple of days to enable the two ministries to finalise a way out well before the next date of hearing at the Islamabad High Court.

It was during these discussions that the petroleum ministry told Mr Dar that about 358mmcfd of gas would be made available to the priority industrial sector without curtailing supplies and gas pressure to residential consumers at pre-determined times.

It was informed that about 158mmcfd of fresh supplies from newly developed gas fields was being inducted into the system that would be dedicated to priority industrial units along with 200mmcfd of liquefied natural gas (LNG).

Mr Abbasi said the prime minister had disallowed the gas price increase at all costs. He said the revenue requirement for the gas companies determined on the basis of lower gas allowance in gas rates by the Oil and Gas Regulatory Authority (Ogra) had now reached a stage where even zero loss would have no impact on the gas companies because they were not able to meet those revenue requirements.

He said there was no gas shortage problem in Sindh, Balochistan and Khyber Pakhtunkhwa. The only problem was in Punjab where demand in residential sector alone was about 950 mmcfd against a net gas availability of about 650mmcfd. He said the gap would be partially met through gas pressure profiling and partly through diverting LNG to the domestic sector.

Responding to a question, the minister said the total LNG supply would reach 600 mmcfd in January from normal supplies of 400mmcfd. Of this, about 150 mmcfd would be diverted to the residential consumers in January and 100mmcfd in February to minimise gas shortfall in Punjab to domestic consumers.

These quantities would be later withdrawn from the domestic sector in the subsequent months.

The overall gas shortfall even in Punjab would not be as severe as before. Although some localised complaints would remain there, it would not be a massive issue as it used to be in the past.

The finance minister shared with the petroleum minister the comparison of oil prices in the South Asia, particularly oil importers India and Bangladesh, and said Pakistan had maintained the lowest prices of petroleum products, said an official statement.

Published in Dawn, November 16th, 2016