ISLAMABAD: With the federal government gearing to average out domestic and imported gas to address about Rs150 billion of circular debt, the Sindh government on Tuesday made clear that being the largest producer it would not allow weighted average sale price of cheaper local natural gas and expensive imported gas. Sindh sought compensation for its gas flowing to other provinces at subsidised rates.

In follow up to a recent meeting between the centre and the provincial government led by federal Minister for Planning Asad Umar and Sindh Chief Minister Syed Murad Ali Shah, respectively, on the issue of weighted average cost of gas (WACOG), the provincial government said it would resist any attempt to change the prevailing ring-fenced sale prices of local gas to tier-1 consumers (domestic and existing consumers) and imported regasified liquefied natural gas (RLNG) to tier-2 consumers (new industrial).

In a letter to Federal Minster for Energy Hammad Azhar, provincial energy minister Imtiaz A Shaikh also demanded that the Sui Southern Gas Company Limited (SSGCL) be made to complete gas connection schemes pending since 2010.

He also demanded that Sindh should be given representation in corporate bodies including the Oil & Gas Regulatory Authority (Ogra), Pakistan Petroleum Limited, Hydrocarbon Development Institute of Pakistan, Pakistan State Oil and refineries.

Informed sources in the federal government told Dawn that during the meeting on WACOG of indigenous gas and RLNG, the Sindh CM had initially opposed the formula. However, he later gave an understanding to change the stance for WACOG since being the largest industrialised city Karachi was to suffer the most in the absence of any formula going forward.

It is pertinent to mention that Mr Shah wanted certain compensations in related adjustments – completion of gasification schemes and others – on which Mr Umar advised for these demands to be formalised in writing.

A senior government official said the conclusion of the meeting that took place at Sindh Chief Minister House in Karachi on August 8 had given the Petroleum Division a reasonable way forward towards WACOG in a swift manner. “You would see progress pretty soon, positively in Council of Common Interests (CCI),” he said.

The meeting, led by Mr Umar and Mr Shah from respective sides, was attended via video link by federal energy minister, Special Assistant to the Prime Minister (SAPM) on Petroleum and Power Tabish Gauhar and SAPM on CPEC Khalid Mansoor among others.

The centre warned that shortage of local gas would keep growing and despite higher production Sindh would not be in a position to sustain. Industrialisation would not be possible when one factory is operating at cheaper local gas and another factory next door was to compete with expensive imported molecules. The difference between the local and imported gas ranged Rs500-800 per unit depending on circumstances.

Mr Shaikh in his letter said the Sindh CM had clearly explained the position of the province on WACOG or any attempt to rework the present arrangement. “The government of Sindh does not support and rejects any attempt to alter the present arrangement of WACOG for natural gas produced in the country,” he said, adding any attempt to add RLNG in the present WACOG prices with any ring-fenced options with tier-I consumers of indigenous natural gas would phenomenally elevate the gas prices upward. “This is detrimental to and adversely impact domestic, commercial, industrial and GNG sector consumers in Sindh,” he maintained.

Published in Dawn, August 18th, 2021