During a meeting held on Thursday, the newly-appointed Energy Minister Hammad Azhar was informed that gas companies like Sui Northern Gas Pipelines (SNGPL), Pakistan LNG Limited (PLL) and Pakistan State Oil (PSO) were moving towards a financial collapse owing to the circular debt which had inflated due to the transfer of expensive LNG gas towards the domestic sector.
During the last three winter seasons SNGPL had supplied LNG to the domestic sectors that lead to non-recovery of over Rs100 billion from the domestic consumers. Currently, there is no mechanism in place to recover this huge amount from the domestic consumers as LNG was imported by the Pakistan Muslim League-Nawaz (PML-N) government for the power and commercial sectors.
However, the government had transferred this burden of expensive gas onto domestic consumers to tackle the gas crisis in the winter season but it was at a huge cost. Therefore, the only way to prevent the financial collapse of the gas companies is to raise the gas prices by introducing new formula of weighted average gas, said the Petroleum Secretary.
Azhar was also briefed about unaccounted for gas (UFG) in gas companies. The officials disclosed that gas leakage, gas theft and measurement accuracy were the three main reasons which contributed to increase in UFG.
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The Energy Minister was also told that the annual profit before tax of SOEs under administrative control of the Petroleum Division is Rs178 billion and these companies contribute with taxes amounting to Rs864 billion per annum in the national exchequer kitty. Total spending on CSR activities by petroleum companies amounts to s3.2 billion annually.
He was also briefed in detail about the about the positive progress on UFG reduction, construction of cross national/local gas pipelines and Exploration and Production activities by the Secretary during the meeting.
The Secretary also brought to light several issues including the issue of rationalisation of gas sale prices, recovery of receivables of companies, security measures at E&P sites and the measures being taken to address these issues.
Azhar was also informed about the reformation/restructuring of companies’ boards and appointments of MDs of SOEs under the Petroleum Division.
The minister commended the team of the Petroleum Division for positive progress on key areas of public delivery and administrative services and said that a comprehensive plan of action would be put in place for smooth redressal of several issues of the oil and gas sector.