ISLAMABAD: Despite collecting Gas Infrastructure Development Cess (GIDC) worth hundreds of billions of rupees, the petroleum ministry is seeking separate recovery of Rs101bn from gas consumers to build pipelines for gas companies.
The government is to collect Rs145bn through GIDC on gas sales during the current financial year and it has given undertakings to parliament and courts that the money would be used for construction of the gas pipeline network.
The GIDC has been collected from various consumer categories — except residential — for about five years with the sole objective of arranging funds for gas pipeline infrastructure to facilitate utilisation of imported gas from proposed pipelines from Turkmenistan and Iran.
Sources said a special meeting of the Economic Coordination Committee (ECC) of the cabinet had been convened on Tuesday to consider petroleum ministry’s request for allowing collection of Rs101bn from consumers so that the gas companies could construct pipelines to transmit imported LNG from ports to gas load centres.
The petroleum ministry has also urged the ECC to allow the two gas companies to claim return on investments to be made on pipelines with this additional cost.
A summary has been moved in such a hurry that it was not circulated to the two major stakeholders — the Ministry of Finance and Oil and Gas Regulatory Authority — for mandatory comments because of paucity of time, official record seen by Dawn suggests.
The ministry said the ECC had approved in September last year borrowing of Rs101bn from commercial banks to SNGPL and SSCGL to carry out augmentation of pipelines for phase-II of the upcoming LNG and anticipated indigenous supplies against GoP guarantees to be provided by the ministry of finance.
The said ECC decision was accordingly conveyed to the Ministry of Finance, SSGCL, SNGPL and Ogra for implementation. Consequently, the Ministry of Finance initiated its facilitation process for security requisite bank financing in favour of the gas utility companies to achieve a tight timeline for completion of the project.
Meanwhile, Ogra in its determination of Estimated Revenue Requirement (ERR) for 2013-14 categorically conveyed its stance to gas utilities that financing of all major gas pipeline projects should be from GIDC to avoid double impact on consumers as the same consumers were paying the cess and return on assets.
The authority also said that financing of such projects from GIDC would not be added in the rate base for return purpose which in fact invites double treatment at the cost of consumers. Therefore, Ogra held that this financial burden might not be passed on to general public and all such projects should be financed from GIDC which had been established exclusively for the purpose.
The summary said the SSGCL had now reported that Ogra in its determination of ERRA 2015-16 has also disallowed return on assets on the infrastructure required to carry RLNG in its decision of Dec 18, 2015, on the grounds that these assets needed to be created from the funding already generated from consumers as a cess under the GIDC Act.
The SSGCL has claimed, according to the summary, that the company was making substantial investment of Rs60bn in RLNG project against which return is not guaranteed while it was incurring huge financial costs to finance these investments from its own resources.
The ministry has not reported in its summary where the GIDC collections were going.
Published in Dawn, January 19th, 2016