ISLAMABAD: The Economic Coordination Committee of the cabinet approved in principle on Thursday a massive increase in gas prices for different categories of consumers, subject to approval by the prime minister, curtailment of gas for CNG stations for two days in Sindh and three days in Punjab and a negotiated award of $2.2 billion contract to a Chinese company for the 1100MW Kohala hydropower project in Azad Kashmir.
A meeting of the ECC, presided over by Water and Power Minister Syed Naveed Qamar in the absence of Finance Minister Dr Abdul Hafeez Shaikh, also approved a subsidy of Rs2 billion on essential items to be sold through the Utility Stores Corporation during Ramazan.
“The committee accepted the economic rationale for the revision of gas sale prices and for the removal of distortion in the (gas) prices,” an official statement said, adding that a final decision had been deferred “for two or three days so that the matter may be discussed at the cabinet level or with the prime minister”.
The decision has in fact been put off in view of a Sindh High Court verdict on prescribed gas prices expected on July 1.
A senior official told Dawn that Petroleum Minister Dr Asim Hussain would again take the matter to the prime minister who had asked him a day earlier to get an economic decision from the ECC before a political decision.
Under a uniform natural gas management policy, gas tariff will be raised by 15 per cent for domestic and commercial consumers, by 18 per cent for industries, by 36 per cent for the power sector and by 96 per cent for fertiliser feed stock.
The ECC also decided to raise CNG rates from 45 per cent of petrol to 65 per cent, an increase of Rs12 per kg from Rs58, and curtail gas supply to CNG stations in Punjab for three days and in Sindh for two days to share gas shortage across the country.
The gas so saved will be used for power generation in Sindh (KESC) and will be provided to fertiliser, industrial and power sectors in Punjab on an equitable basis to ensure consistent power supplies.
The ECC decided to continue gas supply to two independent power producers (IPPs) for another five months and allow two others to use diesel as alternate fuel for which price differential would be picked up through an increase in electricity tariff.
Gas supply contracts of four IPPs with a combined capacity of about 800MW expired on June 30. The uniform gas management policy will be presented to the cabinet for a formal consent.
In another major decision, the ECC allowed negotiations with CWE of China, a subsidiary of Three Gorges Corporation, for the award of 1100MW Kohala hydropower project in Azad Kashmir at an estimated cost of $2.2 billion, bypassing procurement rules which call for an international competitive bidding.
Sources said Wapda strongly opposed the bypassing of competitive bidding and wanted a fair competition to get a lower bid. It said the procurement rules did not allow a public sector entity to have a negotiated contract award.
The water and power ministry, which had signed a memorandum of understanding with the CWE on the instruction of President Asif Ali Zardari, however, found a legal lacuna to avoid competitive bidding.
It argued that since the Pakistan Public Procurement Authority (PPRA) had no legal jurisdiction in Azad Kashmir, the project should be awarded to the Chinese firm on a single bid basis. The AJK government had also consented.
Wapda contested the argument and said that since the project would be funded through the public money and Wapda’s resources had been raised through public funds, it had to follow PPRA rules.
Under instructions of the ECC, a ministerial committee had, however, suggested seeking a legal opinion from the law ministry.
The law ministry is reported to have consented to bypassing the PPRA rules in AJK, enabling the ECC to formally allow a negotiated deal with the Chinese firm. China had offered to finance the project and recover it through tariff over 50 years of project’s life.
The ECC meeting also issued a no-objection certificate to the petroleum ministry to award a contract to Khan Research Laboratories (KRL) for developing the Uch-II gas project.
KRL has offered to undertake the project at a price lower than the one offered in a bidding which was cancelled because of inconsistencies in bidding consortium.
The ECC allowed furnace oil blending in the country under monitoring by the Oil and Gas Regulatory Authority.
It approved modification of power tariff by Nepra, allowing operation of gas-based IPPs on diesel as backup fuel with full cost recovery for whatever period gas is not available to them.
Dear visitor, the comments section is undergoing an overhaul and will return soon.