No gas shortage, claims Babar
Islamabad – Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar has said that the circular debt is not going to be zero next month as the government, per commitment with IMF, didn’t increase the electricity tariff in January 2020 due to high inflation and Corona. Talking to media along with Minister for Information and Broadcasting Syed Shibli Faraz, Nadeem Babar further shared some of the data related to power and gas sectors of the country and negated the impression created in recent media reports.
Replying to a query on gas shortage in various parts of Punjab and KP, Nadeem Babar assured that there will be no shortage of gas in the country as both the LNG terminals are running at full capacity. However, consumers will face low pressure problem in winter. Arrangements are being made to import around 1300-1325 cubic feet of LNG to meet domestic needs.
Sindh government allowed working on 17 km gas pipeline, however the formal approval from the provincial cabinet is not received, he added.
Replying another query regarding the government claim of bringing down the circular debt to Zero in December 2020, Nadeem Babar said that it will not come down to Zero as an increase of Rs270 billion in circular debt is due to the fact that Prime Minister did not allow an increase in power tariff due in January this year as per commitment with IMF because of high inflation January and outbreak of COVID-19 in March 2020.
Another increase which needed to pass on to the consumers is inefficiency of DISCOs which are also causing Rs9 to 14 billion monthly. “In case of zero circular debt by December, the government had to pass on impact of both to the consumers, however Prime Minister disallowed due to COVID-19”, he added. The beneficiary of not increasing the tariff is common citizen, he added.
He said the circular debt inherited from Pakistan Muslim League-N also included Rs146 billion budgeted amount and not released under a industrial package, however, the industry was subsidised Rs3 per unit on power. Nadeem Baber further said that Rs 200 billion was added in the circular debt on account of exchange rate. He said the rupee was overvalued and the government of PTI had to bring a real exchange rate.
Information Minister Shibli Faraz in his reply to the same question said that incise the previous government would have done the tariff determination and its notification on time, the circular debt was not going to be so much high. The previous government was not paying political cost and therefore avoid the increase the power tariff and the present government facing the same dilemma, he added. However, he said the government is trying to control the issues of circular debt and line losses in the energy sector.
Responding to a question, he said federal government would not agree with the petitions filed by gas companies- Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) requesting to allow pass on shortfall of previous years. He maintained that previous government did not allow increase in the gas tariff which resulted increase in shortfall of companies by Rs192 billion.
The present government has imported total of 35 LNG cargos by the end of November on spot purchase bases with an average of 10.4 per cent of Brent, he said adding that the price of LNG purchased from Qatar under long term agreement cost 13.37 per cent of brent.
Due to the previous government contracts with LNG terminal the government has to pay $170 million annually capacity payment for the two LNG terminals. This government wants to establish more LNG terminals however there will be no guarantees involved in it. Two private companies have reached to the stage with one will start the construction of terminal in January while the second will start construction after few months.
The SAPM said it is unfortunate that a negative media campaign is being run against the government about LNG through fudged statistics. He said the present government has imported 35 cargo ships of LNG in last 27 months at 20 per cent low rate as compared to expensive LNG agreements signed by the previous government with Qatar. “Our government imported LNG at average 10.4 per cent of Brent on spot rate as compare with 13.37 per cent being imported under Qatar agreement”, he added.
Nadeem Babar said that the government has also allowed private sector to construct LNG terminals in the country and two companies have shown their readiness to establish these facilities in Pakistan. He said last regime of the PML-N had established two LNG terminals with government’s guarantee of running these facilities, inflicting huge cost on the national exchequer. Regarding offering cooperation to the K-Electric, Nadeem Babar said that LNG was provided to the power generation company in Karachi in summer just to facilitate people of country’s biggest city.
The Special Assistant said land acquisition for North South gas Pipeline project has begun work on the project will be started in February- March and holistic reforms are being introduced in the pipeline sector.
Article source: https://nation.com.pk/26-Nov-2020/no-gas-shortage-claims-babar