ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday deferred increasing commission for the oil industry on sale of petroleum products but allowed introduction of high-grade diesel and reallocated natural gas to domestic consumers among a series of other energy-related decisions.

The first meeting of the ECC led by Prime Minister Shahid Khaqan Abbasi also approved payment of two-month salaries to the employees of Pakistan Steel Mills. It disposed of all the items on the agenda except for increasing commission for dealers and oil marketing companies (OMCs) on the sale of petrol and diesel and pricing of Uch gas.

The meeting decided to shift setting up of three LPG air-mix projects from Azad Kashmir to Murree and Kahuta Tehsils of the prime minister’s constituency and Chitral. It also relocated setting up of another project from Malkot to Balakot – both within Khyber Pakhtunkhwa.

Reallocates gas for domestic consumers; defers increase in margin for OMCs

The Prime Minister Office said the change in sites of the LPG projects was made due to problematic “road access, availability of land and safety and security issues”.

As per decision of the ECC, proposed air-mix project Malkot would be set up at Balakot. Three other proposed projects from Forward Kahuta, Hajira and Abbaspur in Azad Kashmir would now be established in Drosh-Chitral, Beor of Tehsil Kahuta and Ban of Tehsil Murree.

On reallocation of gas from existing fields, ECC approved proposal of Petroleum Division to reallocate up to 130 million cubic feet per day (mmcfd) gas from OGDCL’s KPD field to SSGC and SNGPL on an equal sharing basis.

It was decided that up to 25 mmcfd of gas from MOL’s Makori East field and 6.4 mmcfd from Makori Deep field would be allocated to SNGPL for meeting its gas demand and supply.

The ECC also allowed marketing of high speed diesel oil conforming to Euro-IV and Euro-V specifications under deregulated environment provided there was no burden on Government of Pakistan. The product would be imported.

The oil marketing companies (OMCs) and refineries had turned down petroleum ministry’s desire to introduce Euro-III and Euro-IV-compliant high-speed diesel (HSD) terming it not feasible to sell the higher grade product in Pakistan.

The ministry had proposed to do so through imports in a deregulated environment, and subsequently upgrade local refineries capable of matching the quality of the imported product and asked the oil industry to suggest a mechanism and timelines for the introduction of imported, and then locally-produced HSD in the market.

But OCAC, on behalf of the oil industry said the cost-benefit analysis did not support such a major shift and informed that Europe had took 16 years to complete the transition from Euro-I to Euro-V, beginning with Euro-I in 1993 and culminating in Euro-V in 2009.

The industry said the Euro-II had only recently been introduced in Pakistan, ie on Jan 1. This was when all imports accounting for about 50pc of the total demand were switched to 0.05pc (500 particles per million) from the previous import specifications of 0.5pc (5,000 particles per million). This was a substantial change, which would have a positive impact on the environment.

Pakistan used to have 0.5pc sulphur content HSD, which produced 5,000ppm until recently. This is currently being replaced with 0.05pc Euro-II having 500ppm. Euro-III should have 0.035pc (350 ppm) and Euro-IV 0.005pc (50ppm).

The ECC also approved a proposal by the Petroleum Division to allocate 14.2 mmcfd of gas from Sofia field to SSGC owing to availability of nearest transmission network and that the gas from same block is already being supplied to SSGC.

The ECC also decided to enhance the subsidy up to Rs2 per kg of wheat by the end of current financial year as consented and agreed by Gilgit Baltistan government. The ECC decided that funds for supply of wheat would be provided on a quarterly basis during harsh weather while it would be provided on monthly basis for the remaining part of the year.

The ECC also reaffirmed Rs120 billion worth of RLNG-III pipeline project from Karachi to Lahore as already cleared by ECC.

Published in Dawn, August 30th, 2017