Business

Caretakers in a fix on charging domestic consumers for costly RLNG

Published

1 year ago

Farwa

Currently, tariffs for residential consumers are based on local gas.
IMF is pushing govt to charge full RLNG prices to all consumers.
Caretaker govt plans to import additional cargos to meet demand.

ISLAMABAD: With the expectations of a high gas demand during the winters, the caretaker government is in a fix on whether it should divert costly RLNG to the domestic sector and add to the circular debt, reported The News on Tuesday.

A senior Energy Ministry official, who spoke to the publication on the condition of anonymity, said that if the government bears the cost of that the RLNG injection then it would increase circular debt by Rs200 billion.

Though Pakistan LNG Limited (PLL) has sought bids for two spot LNG cargoes to be delivered on December 7-8 and 13-14, the purchase depends on bids’ price. The bids would be opened on October 4.

The PLL may also seek bids for two more spot cargoes for the month of January 2024.

So far, the RLNG worth Rs248 billion has been injected into the domestic sector from 2018 up till now, but there has been no recovery because it is difficult to recover the cost from domestic consumers.

As per The News, tariffs for residential consumers are based on local gas and not the ones which are imported. In such a situation, if RLNG is supplied to the residential sector for four months during the winters then another Rs200 billion would be added to the circular debt.

The International Monetary Fund (IMF) is pushing the government to charge full RLNG prices to all consumers to put an end to the build-up of circular debt in the gas sector.

The IMF review talks are likely to be undertaken at October end.

“The gas sector has already become unsustainable in the wake of the circular debt that has so far swooped up to Rs2,900 billion,” the official told The News.

Pakistan is, the official said, currently getting RLNG supply from abroad under term agreements which include 5 cargoes from Qatar at 13.37% of Brent, 3 cargoes again from Qatar at 10.2% of Brent, and one from ENI at 12.14% of Brent. So 900 mmcfd of imported gas is not enough to cater to the increasing demand for gas in December.

“This fact has prompted the caretaker regime to import two cargos from the open market which will jack up the imported gas to 1100 mmcfd from 900 mmcfd,” revealed the official.

The local gas production has reduced to 3.2bcfd and it is decreasing by 9-10% every year. This summer season gas was not available to the domestic sector for more than eight hours as it was made available in the morning for three hours from 6am to 9am, at noon, it was available for two hours from 12 noon-2 pm and in the evening it was available for three hours from 6 pm to 9 pm.

Keeping in view the dwindling local gas production, the local gas is to be available for 6 hours a day only — two hours each for the morning, afternoon, and evening cooking times. If the government decided to maintain the gas availability at 8-9 hours, then it would have no option but to divert the RLNG to the domestic sector.

The official said that the Sui Southern may have a maximum gas of 725 mmcfd in its system and Sui Northern 820 mmcfd. The power sector, however, has reduced its demand for electricity generation as power consumption in the winter season tumbles to 10,000 MW across the country. The power sector has reduced its demand to 200 mmcfd for November, 250 for December, 350 mmcfd for January 2024, and 150 mmcfd for February 2024.

Meanwhile, the Sui Northern Gas Pipelines Limited (SNGPL) says that it will start distributing RLNG supply to domestic consumers in Punjab, Khyber Pakhtunkhwa, and northern areas during the winter season from mid-October till March.

Business

Gold prices in Pakistan approach an all-time high.

Published

1 day ago

Farwa

Following a substantial surge the prior day, gold prices in Pakistan are ascending to unprecedented levels with an additional gain on Thursday, coinciding with a rise in global precious metal rates.

The price of 24-karat gold in the local market rose by Rs700 per tola, reaching Rs277,900, as reported by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Likewise, the cost of 10 grams of 24-karat gold increased by Rs600, currently priced at Rs238,254.

Globally, gold prices exhibited an upward trend, increasing by $7 throughout the day. The APGJSA reports that the international gold price was $2,682 per ounce.

Notwithstanding the increase in gold prices, the silver market exhibited stability, with the price of silver maintained at Rs3,050 per tola.

In the previous month, gold prices in Pakistan reached an unprecedented high of Rs 277,000 a tola, driven by substantial gains in the worldwide market.

Business

World Bank: Power industry subsidies soar by 400% in just five years.

Published

1 day ago

Farwa

Ninety-four percent of domestic customers will benefit from the budgetary subsidy in 2024, according to a World Bank report, which credits the increase in protected consumers with contributing to the weight of subsidies.

In the current fiscal year, the electricity sector subsidy has increased by an astounding Rs. 954 billion, from Rs. 236 billion in the 2020 fiscal year to Rs. 1190 billion.

Notwithstanding changes, the circular debt has averaged Rs. 400 billion yearly over the last four years due to the incapacity to minimize losses and inadequate recovery of electricity payments.

According to the World Bank, the government must solve the fundamental problems in the power industry in order to lower the burden of subsidies and circular debt, as rising electricity prices and inadequate tax collection will only serve to worsen the circular debt crisis.

The rise in Pakistan’s power sector circular debt has raised worries from the World Bank (WB) despite an unprecedented increase in energy pricing.

Within the last six years, the debt has grown by 1241 billion rupees, according to the World Bank’s study. Between 2019 and 2021, the debt climbed by 1128 billion rupees.

The electricity sector’s circular debt has been increasing at an alarming rate, according to a World Bank analysis. Between 2022 and 2024, there was a substantial increase of 113 billion rupees.

Pakistan’s electricity industry has 2393 billion rupees in total circular debt as of 2024.

Restructuring is required to solve the circular debt issue, according to the World Bank.

Business

Final settlement: Govt to pay five IPPs Rs 72 billion.

Published

1 day ago

Farwa

On October 10, Prime Minister (PM) Shehbaz Sharif declared that the agreements with five IPPS would be terminated in the first phase. Sources claim that the government will give Rs 15.5 billion to Rousch Power and Rs 36.5 billion to Hubco.

In a same vein, the federal government would pay Lalpir Power Rs 12.8 billion, Atlas Power Rs 15.5 billion, and Sapphire Power Rs 6 billion.

The sources state that late payment fees are not included in the settlement. With effect from October 1, the agreements with the five IPPs will be considered officially ended.

PM Shehbaz earlier remarked that the termination was carried out with the owners of the IPPs’ mutual permission while presiding over the federal cabinet meeting in Islamabad.

The Prime Minister notified the Cabinet that the only money that will be paid, interest-free, to these IPPs is the outstanding balance.

According to him, the national exchequer will gain over 411 billion rupees from the termination of these contracts, while power customers will save roughly sixty billion rupees.

According to Prime Minister Shehbaz Sharif, it was the result of the arduous teamwork of the entire government. In this regard, he also acknowledged the contributions and assistance of the associated parties. He specifically mentioned General Asim Munir, the Chief of Army Staff, who showed a personal interest in the situation.

The prime minister characterized the development as the start of a trip that will ultimately lead to the advancement and prosperity of the populace.

PM Shehbaz Sharif also brought up the assistance that the Punjabi and Federal governments gave to power users over the summer.