Gas companies ‘may go bankrupt without raising tariffs’ – newspaper, Mousadiq says

ISLAMABAD: With the gas industry’s revolving debt of Rs 1.5 trillion, the oil sector said on Monday that gas companies will go bankrupt without raising gas tariffs, which is now inevitable given the revised Oil and Gas Regulation Act .

Oil Minister Musadik Malik and Secretary Ali Reza Bhutta testified before the Senate Standing Committee on Petroleum that the government did not have the funds to carry out the bailout, according to the revised amendment passed by the previous government. Ogra Act, natural gas tariff hikes are inevitable. International Monetary Fund program.

Mr Malik told a Senate committee meeting chaired by Senator Abdul Qadir that the assets and profits of gas companies were falling and the government did not have the funds to bail them out. In this case, they will go bankrupt.

Ogra chairman Masroor Khan also told the panel that the freezing of gas prices over the past few years has put gas companies under financial pressure.

Faced with falling local gas production, state oil minister says government can only provide relief through cross-subsidisation

Minister Buta said that the Ogra law has been amended according to the IMF plan, the gas price determined by the regulator will be automatically notified after 40 days are completed and the government cannot prevent this. He said the revolving debt of the gas industry has reached Rs 1.5 and it is now an unsustainable situation.

However, Mr Malik said the government would try to protect the poor, but with domestic gas production drying up and importing LNG too expensive, the most it could do was cross-subsidize.

Senator Kadir said the matter had become very challenging and had to be looked at carefully by all stakeholders. He believes domestic (residential) consumers should be given priority when it comes to gas supply and pricing. “Domestic users should charge relevant industries at affordable prices and industrial units,” he said, adding that the CNG industry should be allowed to import natural gas on its own to ease the government’s burden.

However, businessmen in Karachi are demanding that gas supply to residential consumers be stopped, or at least be charged at the full gas price applicable to other industries. “Where in the world are residential consumers considered the top priority in gas supply? He questioned, adding that in order to compete in the world, gas should be provided for economic reasons.

The leadership of the Karachi Chamber of Commerce and Industry briefed the panel on the grievances of industrialists, including the lack of gas supply for the past five months. Senator Kadir observed that the main cause of the current economic deterioration is the disparity between the value of imports and exports, and to reduce this trade deficit, we need to incentivize and promote our local industries.

The committee also discussed rules that would allow oil marketing companies to sell high-octane blends (HOBC97). Mr Malik said the oil sector only regulates those products that are consumed on a large scale, such as RON 92, but HOBC97 does not fall into this category. However, he assured the committee that the oil sector would ensure that all products, including HOBCs, met approved specifications.

When considering the issue of the explosives sector restraining people from renting out their property, especially the Oil Marketing Company (OMC). A spokesman for the explosives department told the committee that there was no such binding on individuals and that the department only granted tanker licenses to OMC.

Commission considered public petition on meter tampering and overbilling. The Commission directed that the services of an independent third party should be engaged to help regulators and companies use scientific means to ensure the authenticity and integrity of theft detection.

Posted in Dawn, May 31, 2022