Economic Coordination Committee defers gas tariff increase, waives Karkey’s port charges – Newspaper

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet postponed Wednesday the decision on the increase in the price of gas for further consultations and resigned from the port charges of Rs195 million to the Turkish firm Karkey as part of a $ dispute settlement 1.2 billion

The meeting, chaired by the prime minister's financial advisor, Dr. Abdul Hafeez Shaikh, discussed the proposal of up to a 15 percent increase in the price of gas and noted that some changes are required to minimize the burden on domestic consumers in accordance with the guidelines of the Prime Minister.

An official said that increasing gas rates for domestic consumers during the winter season of high consumption would not go well from a political perspective.

It was also noted that the government had reduced this week the Cess of gas infrastructure development (GIDC) by Rs5 per mmBtu over the price of natural gas or Rs400 per bag of fertilizer to contain the increase in wheat prices in the country.

Therefore, it would be counterproductive if gas rates for the fertilizer sector increase, as it would lead to higher urea prices. In addition, it was necessary to examine the impact of the gas rates proposed by the Petroleum Division for the industrial sector.

Approves the sale of SBP stakes in House Building Finance Company

The division told the committee that it had already prepared a revised summary on these lines and that additional consultations were required with the ministries of commerce and industries for the export-oriented and fertilizer-oriented sectors. In addition, feedback from the Ministry of Finance on the revised summary was needed.

According to the previous summary, the Petroleum Division had proposed an increase in the rental of meters for domestic consumers from Rs20 per month to Rs80, an increase of 5pc in the gas rate for domestic consumers, 12pc for power plants and 15pc for plants Industrial captive energy and compressed natural gas (CNG) stations.

The division had also proposed that fertilizer plants receive fuel at the price of regasified liquefied natural gas (RLNG) which was currently around Rs 1,672 per mmBtu.

The proposed adjustments in gas rates were aimed at raising Rs35bn in additional revenue for the two gas companies: Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Ltd, whose revenue requirements have been determined by the regulator at Rs274. 2bn and Rs282.9bn respectively.

Karkey settlement

The ECC also approved the exemption of all the quotas and port charges that amount to Rs194.951m pending against Karkey as of January 31 or until the ships leave the port. The exemption was required as a result of the $ 1.2 billion settlement agreement recently reached between the Government of Pakistan and Karkey.

In the summary presented by the Ministry of Industries and Production for the payment of outstanding liabilities of Pakistan Steel Mills (PSM) against the SSGC for non-payment of gas bills, the ECC approved the release of Rs350m for the partial liquidation of liability of the utility company against the minimum gas supply of approximately 2-3 mmcfd.

The Energy Division argued that this payment was necessary to ensure the continuation of the gas connection to the PSM with cheaper local gas; otherwise, the complete disconnection would result in sanctions and it would not be possible to reactivate the gas in domestic gas rates according to the laws.

That could become a great challenge for the revival or privatization of the PSM because the new connection would have to be based on imported LNG tariffs.

The meeting also approved the establishment of a Trust Fund to implement a joint venture facility under the third tranche of $ 10 million of the World Bank loan obtained for Pakistan Mortgage Refinance Company Limited (PMRCL). The purpose of the trust is to leverage your funds by issuing guarantees in favor of mortgage debtors to cover possible losses of eligible mortgage loans.

The meeting also approved a request from the Finance Division for a supplementary technical grant of Rs 80 million in the budget for the current year's fiscal year to provide assistance to the families of government employees who expired during service and provision. of ad hoc help 2019.

The meeting also approved another proposal from the Ministry of Finance for the sale of shares owned by the State Bank of Pakistan in House Building Finance Company Limited (HBFCL) under subsection 6 (A) of section 17 of SBP Act 1956

The central bank currently owns about 91 percent of HBFCL shares and the government is working on the privatization of HBFCL as soon as possible.

The ECC approved another complementary technical grant of Rs100m for the National Information Technology Board (NITB) of the Ministry of IT and Telecommunications for the centralized acquisition of information, communication and technology (ICT) infrastructure to ensure the electronic preparation of the federal government to implement the electronic government program.

Published on Dawn, January 30, 2020