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

SFD and Pakistan Sign Two Deals Totaling $1.61BLN

Published

2 days ago

Farwa

Two agreements totaling $1.61 billion have been inked by Pakistan and the Saudi Fund for Development to improve their bilateral economic cooperation.

Business

Saudi Arabia and Pakistan sign an MOU to strengthen their auditing industry collaboration.

Published

2 days ago

Farwa

A spokesperson for the office of the Auditor-General of Pakistan (AGP) announced on Monday that the two countries have signed a Memorandum of Understanding (MoU) to strengthen cooperation in public sector auditing through improved cooperation between audit institutions of both countries, as well as training programs and the exchange of trainers.

This comes as a group from Saudi Arabia’s General Court of Audit (GCA), headed by GCA President Dr. Hussam bin Abdulmohsen Alangari, arrived in Pakistan on Sunday for a four-day visit.

The agreement was signed during AGP Muhammad Ajmal Gondal’s meeting with the Saudi delegates, aiming to strengthen audit cooperation, enhance knowledge-sharing, and improve governance, transparency and accountability in government spending.

Public relations officer Muhammad Raza Irfan of the AGP’s office told Arab News that the deal will further advance bilateral collaboration between Saudi Arabia and Pakistan in addition to enhancing professional ties between the two nations’ auditing institutions.

In a statement released from his office, AGP Gondal was cited as saying, “This collaboration marks a significant step toward fostering international cooperation in auditing.”

“The exchange of ideas and methodologies will undoubtedly strengthen our capacity to meet emerging challenges and set new benchmarks for public accountability.”

Discussions at Monday’s meeting focused on fostering closer ties between the Supreme Audit Institutions (SAIs) of Pakistan and Saudi Arabia, sharing innovative audit methodologies, and planning collaborative initiatives for the future, according to the AGP office.

The two parties decided to increase their knowledge of theme, environmental, and impact audits as well as to exchange best practices in audit standards, performance audits, and citizen participation audits.

The statement added, “It also agreed to exchange trainers, address new auditing challenges, plan cooperative audits, including a performance audit on the oil and gas sector in 2025, and work together on training programs.”

Both sides reaffirmed their shared commitment to promoting transparency, accountability and excellence in public sector auditing.

Business

The government chooses to continue the PIA privatization process.

Published

2 days ago

Farwa

The Pakistan International Airlines (PIA) privatization process will be restarted by the federal government, and expressions of interest would be requested within the month. Officials stated that the Prime Minister’s Committee on Privatization will convene to make the final decision.

Usman Bajwa, the secretary of the Privatization Commission, gave a briefing on the updated procedure to the National Assembly Standing Committee on Privatization. Additionally, he disclosed that airlines other than PIA are now able to compete with regional carriers thanks to IMF-approved aircraft tax concessions.

Farooq Sattar, the chairman of the privatization committee, underlined the importance of giving PIA workers at least five years of job security. Employee protection will continue to be a top priority and will be resolved prior to bidding, the Privatization Commission promised.

PIA’s liabilities totaling Rs650 billion have already been assumed by the government, and an additional Rs45 billion in outstanding debts must be paid before the privatization process can begin. As of the now, PIA has assets around Rs155 billion and liabilities worth Rs200 billion. It will be necessary for the new buyer to expand the fleet by 15 to 20 aircraft.

Additionally, the Privatization Committee has sought a timeline for the privatization of Faisalabad, Gujranwala, and Islamabad Electric Supply Companies. Officials stated that after the appointment of a financial advisor, the privatization process for these companies will accelerate.