Govt fires up gas bomb

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Indecisiveness and inefficiency, the hallmarks of the incumbent government, were obvious on Friday when it increased CNG prices to Rs 77.14 in Khyber Pakhtunkhwa, Balochistan and Potohar and to Rs 71.07 in Punjab and Sindh, but immediately revised its decision in the face of a strong outcry from the people, reducing the gas prices by 60 percent to notify new prices of Rs 74.30 and Rs 69.62 per kg respectively with effect from January 1, 2012.
The Oil and Gas Regulatory Authority (OGRA) notified a massive increase of 14 percent in the gas tariff on all the consumer categories, with the imposition of gas infrastructure development cess on all categories expect domestic, commercial, cement and new fertiliser plants with effect from next year. The OGRA notification said the increase in gas sale prices was necessitated owing to the cess imposed by the federal government, rise in cost of gas, decrease in gas sales volume as well as prior year adjustments of the gas companies with respect to line losses and non-operating income. About the adjustment in CNG consumer price, it said it was necessitated owing to increase in natural gas prices and imposition of gas cess by the federal government. However, no clarification has been offered on the abnormally high annual unaccounted for gas (UFG) losses of 12 percent of the two state-owned gas utility companies, as compared to the international benchmark of 5 percent. One percent UFG comes to a loss of Rs 2 billion per year. This translates into a massive loss of Rs 24 billion every year. The government and OGRA have both failed their primary duty of protecting the consumers from paying this unaccountable loss to the companies.
Massive imposition of cess has been reserved only for the CNG sector, which the Petroleum Ministry holds primarily responsible for the current gas shortage in the country. Consumer price for CNG in Zone I, consisting of Khyber Pakhtunkhwa, Balochistan and Potohar region, has been increased from Rs 66.42 per kg to Rs 74.34 kg, while in Zone II, consisting of Sindh and Punjab, the consumer price has been increased from Rs 63.11 to Rs 69.62 per kg. Increasing the CNG prices to Rs 74.34 and Rs 69.62 per kg will bring them closer to the petrol prices of Rs 87.89 per litre and LDO price of Rs 86.78 per litre.
The tariff for domestic consumers using up to 100 cubic metres or 3.5 mmBTU increased from Rs 107.87 per mmBTU to 122.95 mmBTU. Tariff for consumers using up to 300 units or 10.6 mmBTU will jump from Rs 215.74 to Rs 245.89 mmBTU. Tariff for domestic consumers using up to 500 cubic metres or 17.7 mmBTU increased from Rs 908.38 to Rs 1,035 mmBTU. And for domestic consumers using more than 500 cubic metres or 24.8 mmBTU, the price was increased from Rs 1,142 to Rs 1,302 mmBTU. Tariff of commercial consumers will be increased from Rs 526.59 to Rs 600.19 mmBTU per month. The Industrial sector tariff increased by 16.97 percent from Rs 434.17 to 507.86 mmBTU, which will also include Rs 13 mmBTU as cess. Power sector tariff of WAPDA and KESC will jump by 13.58 percent to Rs 507.86 from Rs 447.14 mmBTU, including cess of Rs 27 per mmBTU.
Tariff for IPPs increased by 34.57 percent to Rs 507.86 from Rs 377.39 mmBTU including cess of Rs 70 mmBTU. Cement sector tariff has been increased 14 percent from Rs 609.09 mmBTU to Rs 694.22 mmBTU but no cess has been imposed as at present no gas supplies are given to the sector. Tariff of feed-stock for old fertiliser plants was jacked up by 207.10 percent from Rs 102.01 to Rs 313.27 mmBTU, including a cess of Rs 197. While for new fertiliser, tariff increased only 1.81 percent from Rs 59.59 to Rs 60.67 mmBTU and no cess has been imposed. Gas tariff for direct sales to WAPDA from Kandhkot to Guddu increased from Rs 431.94 to Rs 507.86 mmBTU, including a cess of Rs 27. Tariff from Sara and Mari to Guddu increased 20.89 percent from Rs 420.09 to Rs 507.86 mmBTU including a cess of Rs 27 mmBTU. Petroleum Minister Dr Asim Hussain has been claiming that the increase in gas tariff will not impact the people but the increase in gas tariff of CNG, industrial, power and fertiliser sector will be indirectly impacting the people and will massively increase inflation. OGRA also issued directives on Friday to All Pakistan CNG Association (APCNGA) to immediately stop refueling vehicles in which cylinders were installed beneath passenger seats or on the roof, as such installation were in violation of the safety code of practice. In case of any violation, the licence of CNG stations would be revoked. Increase in CNG tariff and OGRA directive was immediately rejected by the APCNGA, which gave a province-wide strike call in Punjab on Sunday to dissuade the government from implementing the decision. It said there was no justification for price increase due to the severe shortage of gas in the country and the government was rushing for implementing safety measures which could be done immediately.