Islamabad July 8 2022: Minister of State for Petroleum Dr Musadik Malik on Thursday said his ministry had devised a broader framework under which 50 per cent of the country’s total population, comprising the poorest of the poorest people, would be saved from the gas price hike.
“We have presented a principle, for which the Federal Cabinet’s guidance and approval to be sought. The Petroleum Division has evolved a framework that 50 per cent of citizens of the country, which means the poorest of the poor, will be protected from the additional burden of increased price [of gas]. Implementation of the proposal will be subject to approval by the cabinet,” he said while addressing a news conference.
Before leaving the government, he said, the Pakistan Tehreek-i-Insaf (PTI) made legislation under which the Federal Government had no authority to change the gas price determined by the Oil and Gas Regulatory Authority (OGRA).
“We are working out for the last two-three weeks how the gas consumers can be given relief as OGRA has informed us about the new rate which is far high as compared to the last year because the rate had not been increased for the last two years,” he said.
As the PTI government had committed blunders in the energy sector coupled with its mismanagement and inefficiency, a detailed meeting was held to examine whether rationing or re-pricing of the gas was required to rectify the situation, he added.
Dr Musadik said it was unfortunate that the past government did not procure Liquefied Natural Gas (LNG) cargoes that were available at the reduced rate of $4 per MMBTU (Metric Million British Thermal Unit) two years ago, which now cost $40. “It means that now per LNG cargo cost is around $138 million, which was available at $12.5 million two years ago for 2-4 years, but the PTI government did not pay any heed towards buying the commodity.”
It was beyond understanding as to why the PTI government did not arrange the LNG when regasification terminals were available, whom the country was making ‘capacity payment’ but those were not utilized, he added.
As the long-term agreements were not signed by the PTI government, he said, now the much-needed gas was not available in the country, even at an increased price, despite frequent tendering in the international market.
Commenting on the prevailing gas supply situation, he said on the network of Sui Northern Gas Pipelines Limited around 670 MMCFD was available against the average winter demand of 1,170 MMCFD of domestic consumers in Punjab and Khyber Pakhtunkhwa only.
He said it was unfortunate that the poor segments of the society were using the expensive Liquefied Petroleum Gas (LPG) in the country, while those who had multiple geezers, stoves and cooking ranges, were using the cheap natural gas. The price of LPG was five times higher than the natural gas, he added.
The minister said it seemed that nobody bothered to plan how the gas would be purchased in the winter which was the peak season for demand. However, the current management was striving to resolve the issue by engaging the governments of different countries.
“The governments of the countries to whom we are negotiating asking us why you did not sign the contracts in the last winter when the entire Europe was signing the contracts for purchasing the gas at the low rates,” he observed.
“This is not the way the state functions. However, we will leave no stone unturned to steer the country out of the current crises,” he said, adding the coalition government took tough decisions in the supreme national interest.
The minister said national development and due care to the poor should be the main focus of politics, instead of criticizing the relief given by the Punjab government to the consumers using up to 100 electricity units per month.
Answering a question, Dr Musadik said Pakistan fortnightly procured petroleum products through competitive bidding in the international market, and revisions in its prices were determined for the consumers, keeping in view the average price of fuel purchase.
If the existing downward trend in the international market was reflected in the tenders, he said, the new price would hopefully be reduced accordingly. However, he said, there were some compulsions on the government as it had to honour the agreements signed by the previous PTI government with the International Monetary Fund (IMF).
Major commitments made with the IMF, he said, the incumbent government had fulfilled. But, it seemed in the coming days the impact of decreased prices of petroleum products would be passed on to consumers, for which due consultation with Finance Minister Miftah Ismail was needed.
He said although the price of crude oil had declined in the world market, the rate of refined fuel did not decrease at the matching ratio.