The government will be tabling two money bills, petroleum products levy amendment bill 2011 and gas infrastructure development bill 2011, in the upper house on Wednesday.
Pay the govt
An official source said the Petroleum Products (Petroleum Levy) Amendment Bill, 2011 seeks amendment in the Petroleum Products (Petroleum Levy) Ordinance, 1961. The amendment will make every company, refinery and licensee pay the government a levy on petroleum products at such rate as may be notified by the federal government in the official gazette from time to time. The government is also planning to impose a new levy on gas consumption over and above the fixed gas sale price to generate funds to develop natural gas infrastructure for imported Liquefied Natural Gas (LNG), Iran Pakistan (IP) gas pipeline and Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline.
Power to the centre
The gas surcharge will be chargeable from consumers over and above the fixed gas sale price. The levy will be payable at such rate and manner determined by the government. And the government will have powers to determine interest on the amount not paid within due time by companies. To meet the widening demand supply gap of natural gas, which has a contribution of 48 per cent in the country’s primary energy mix, a number of gas import projects are being pursued. Incase the required gas infrastructure is not developed on urgent basis, the government would be forced to import liquid fuels at much costlier price as compared to gas.
Presently, neither the government nor Sui companies have adequate funding to implement the above projects and create the required infrastructure. The Gas Development Surcharge (GDS) previously kept for creation of infrastructure and price equalisation is being distributed to provinces in accordance with the NFC award. It is therefore proposed that a new separate levy may be imposed.
Demand-supply gap
The estimated gap between demand and supply is projected to increase from 1.6 bcfd in 2011-12 to over 2.5 bcfd in 2014-15. The IP pipeline project will bring in 750 mmcfd gas, first gas flow of which is expected in 2014. The project involves construction of 781km gas pipeline from Iran-Pakistan border to Nawabshah to inject gas into the transmission systems of the two gas utility companies. The estimated cost of the project is approximately Rs108 billion.
The TAPI pipeline project will bring in 1,325 mmcfd gas, first gas flow of which is expected in 2016. The project involves construction of 1,680km gas pipeline from Afghanistan Pakistan border to Multan to inject gas into transmission systems of the two gas utility companies and onwards to Pakistan-India border.