Petroleum Division holds consultative meeting on gas, LNG pricing mechanism

November 30, 2020: The Petroleum Division on Monday held a consultative meeting with all provincial stakeholders aimed at finding ways and means to determine a pricing-mechanism for gas and Liquefied Natural Gas (LNG).

The meeting, co-chaired by Minister for Energy Omar Ayub Khan and Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar, was attended by Energy Ministers of all provinces, a news release said.

Khyber Pakhtunkhwa Finance Minister Taimur Khan Jhagra, Sindh Minister for Energy Imitiaz Sheikh, Punjab Minister for Energy Dr Mohammed Akhtar Malik, Advisor to KP Chief Minister on Energy and Power Hiyamatullah Khan and Balochistan Chief Secretary Fazeel Asghar represented their provinces in the meeting.

The forum explored the issues, challenges and plausibility of implementing a country-wide sustainable and affordable gas pricing mechanism.

Minister for Energy Omar Ayub Khan thanked the provincial ministers for joining the meeting for national cause.

He said Prime Minister Imran Khan was keen to resolve the issues pertaining to gas sector and maintaining the supply chain of gas throughout the country.

Petroleum SAPM Nadeem Babar initiated the discussion to explore sustainable and affordable mechanism for gas tariff regime.

He recapped the salient points of the consultations held by the Federal Government and Federation during the meeting of Council of Common Interests and Gas Seminar organized by the Petroleum Division in September 2020.

He said the local gas production had decreased over the years, which widened the gap between demand and supply of the commodity.

Nadeem Babar also highlighted the vision of Prime Minister Imran Khan “to resolve the issue within premises of constitutional right of Provinces which is acceptable for all stakeholders. “

He also spoke of legal constraints of the LNG to be added in gas pool.

He said as per decision of the previous government, the LNG had been declared a Petroleum Product (i.e petrol) and not natural gas, consequently, “the LNG was ‘ringfenced’ from local gas that's why Oil and Gas Regulatory Authority cannot include it in the gas pricing and the government cannot provide cross subsidy mechanism to meet all the demand of gas.”

He also apprised the forum about the cross-subsidy being provided by the government on energy sector.

Provincial representatives admitted the fact of gas shortage across the country and asked the Petroleum Division to prepare data-based formula for pricing mechanism of gas sector.

The SAPM concluded the consultative session describing the meeting as a step in the right direction.

He said follow-up sessions would continue between federal government and provinces to formulate the gas tariff mechanism nationwide.

APP