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Nawaz rejected proposal to increase gas prices

22 November, 2014

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ISLAMABAD: Prime Minister Nawaz Sharif has rejected the proposal to increase gas prices for the second time this month.

The Economic Coordina­tion Committee (ECC) of the cabinet, headed by Finance Minister Ishaq Dar, approved on Thursday policy guidelines for the Oil and Gas Regulatory Authority (Ogra) for inclusion of the cost of gas theft and losses in areas facing security problems in the tariff that was estimated to result in a hike of about 30 per cent, or Rs69 billion.

Mr Sharif had rejected on Nov 3 a proposal of the petroleum ministry for about 14pc increase in gas tariff.

The ministries of petroleum and finance later decided at the ECC to empower Ogra through policy guidelines to do the job.

According to sources, the prime minister, presiding over a meeting of the cabinet committee on energy on Friday, said he could not allow the tariff increase unless the ministries concerned convinced him with detailed data and analysis why it was necessary.

He called for a comprehensive presentation on different aspects of gas costing.

He particularly asked the ministries if petroleum and finance explain why the system losses were 10-11pc, what were the international best practices and about internal accountability in the gas companies to reduce the losses.

He said the presentation should include which sector consumed how much gas and what were the category wise delivery costs and prices.

The prime minister was informed that about 2,500MW of electricity would be added to the system by the next summer, including about 1,300MW from new power stations to be run on natural gas and revival of another 1,200MW capacity currently idle because of unavailability of furnace oil and production being expensive. The increase in the power generation capacity will considerably reduce the gap between demand and supply.

Prime Minister Sharif said he was committed to eliminating loadshedding during the tenure of his government.

He said the priority of the government was also to tap the Thar coal resources for efficient and cheap energy production in the next two to three years and it would be ensured that line losses and power theft were brought to the minimum.

The cabinet committee was briefed about coal, liquefied natural gas, solar and wind-based power generation projects which will be completed by 2016-17.

It was informed that 300MW would be added to the national grid before the summer of next year by providing LNG to the Kot Addu Power Company.

The generation of 1,400MW will be converted from furnace oil to LNG to reduce the cost.

The committee was informed that 1,000MW will be added before next summer by using on-site raw gas plants in fields whose linking with the transmission system was economically unviable.

The prime minister approved the policy to provide LNG to the power sector to make it efficient and the electricity affordable.

He said any surplus LNG should be provided to the compressed natural gas (CNG) sector.

The committee was informed that the roadmap presented to the prime minister would progressively reduce loadshedding, while contributing to reducing circular debt and improving the efficiency of the power plants.

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