Connect with us

Business

Caretakers in a fix on charging domestic consumers for costly RLNG

Published

1 year ago

on

  • 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.

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

Published

3 days ago

on

By

The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

Continue Reading

Business

The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

Published

3 days ago

on

By

The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

Continue Reading

Business

Positive IMF negotiations propel KSE-100 Index above 94,000 points

Published

4 days ago

on

By

As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

Continue Reading

Trending