LAHORE: The federal government has decided to generate incremental gas development surcharge (GDS) for the government of Khyber Pakhtunkhwa to finance Karak, Kohat and Hangu gas infrastructure development projects worth more than Rs7.5 billion in aggregate.

For the time being, the KP government will arrange the money from its own budget and then pay it to the Sui Northern Gas Pipelines Ltd (SNGPL) that will also contribute a sum of Rs2.592bn for these projects. The provincial government will recover the amount in the form of incremental GDS (about Rs5.5bn) as pledged by the federal government, Dawn has learnt.

“We have already made Rs17bn additional GDS for Sindh. KP’s surcharge will be one-third of Sindh’s increased GDS and it will enable the provincial government to finance the Karak, Kohat and Hangu projects,” Petroleum and Natural Resource Minister Shahid Khaqan Abbasi said.

Talking to Dawn on Friday, the minister said the KP government would arrange the funds from its own budget, enabling the SNGPL to start work on these projects as soon as possible. Finally, the provincial government would recover it in the form of enhanced GDS from the federal government in the next couple of months, Mr Abbasi added.

In a meeting held last month between federal and KP governments, it was also decided that the Centre would provide calculations, data, etc, related to the projects to the provincial government. The meeting was attended by Chief Minister Pervaiz Khattak, Mr Abbasi and senior officials concerned of the SNGPL and KP Oil and Gas Company Ltd (KPOGCL).

“The SNGPL will provide phase-wise complete BOQ [bill of quantities]/calculations for all the projects in Karak, Kohat and Hangu along with project timelines,” read minutes of the meeting. “It will provide village-wise single line diagrams of current gas pipeline infrastructure along with future proposed infrastructure development plan. Similarly, the SNGPL will further provide the total number of consumers against each village and project phase.”

It was decided that the first phase of the District Karak project would be completed within three months after the allocation of funds, and Kanda village will be included in the phase. The full project of the district would be completed in two years. On KP’s request, the federal government also constituted a working group comprising Gas Director General, KPOGCL chief executive and SNGPL general manager to look into the modalities and coordinate in executing the project and submit monthly reports.

The SNGPL general manager informed the participants that the company had carried out a project study three years ago to provide gas to Karak consumers. The total estimated project cost at that time was Rs6.7bn, which has now risen to Rs7.067bn.

The estimated project cost for supplying gas to various villages of Karak includes maintenance of laid network worth Rs6.598bn and rehabilitation of network worth Rs424 million. “There are a total of 40,000 consumers that fall in the scope of this project. The SNGPL will provide Rs2.592bn. Any cost over and above that will be provided by the federal and provincial governments,” the minutes read.

The general manager added that funds for first phase of the District Hangu project of Rs509.54m have not been forwarded to the SNGPL. The project would help provide gas to 445 gas consumers falling within the five-kilometre radius of Mardan Khel-I well.

Mr Abbasi requested the KP chief minister to release the funds to the gas utility on an urgent basis so that project could be completed and gas could be provided to the consumers.

Published in Dawn, December 31st, 2016