ISLAMABAD - Pakistan has sped up work on Iran-Pakistan gas pipeline and has taken up the matter with US authorities, as in case of failure to lay the pipeline Islamabad may pay a fine of $18 billion.
The Meeting of the Senate Standing Committee on Cabinet Secretariat was further informed by the Director General gas that if gas prices are not increased, gas will be available only for two hours in winter, and if the tariff is increased then it will be available for eight hours.
Meeting of Senate Standing Committee on Cabinet Secretariat was held under the chairpersonship of Senator Saadia Abbasi.
The chairperson committee inquired about the future prospects of Iran gas pipeline project which has been delayed since a decade. Officials apprised that negotiations on the Iran gas pipeline have been speeded up since last year, however, commercial and foreign concerns are the major impediments in the completion of the project.
The committee declared Iran-Pakistan gas pipeline indispensable for the future of the country.
Chairperson of the committee asked that what are the difficulties in importing gas from Iran? Official of the Petroleum Division informed that the gas pipeline project from Iran is being discussed again, but the timeline cannot be given.
On the issue, work and progress has been accelerated during the previous one year, the official said. Under the agreement, we have to complete the Iran-Pakistan gas pipeline by 2024. Do it or else you will have to pay a fine, official of the Petroleum Division said.
He said that Pakistan will spend $2 billion on laying the gas line to Gwadar. “If we do not lay the pipeline, there may be a fine of $18 billion,” the official added. The matter is also being discussed with the US government, the official informed.
Senator Mushtaq asked, “Why are you not completing the gas pipeline, who has stopped you? Who has bound Pakistan in this regard?”
The Petroleum Division official said that no state owned company is willing to come forward and start the work. When a government company is not ready to come forward, why the contract was made, Senator Mushtaq asked.
The agreement was signed by the Pakistan People’s Party government in 2011, official of the Petroleum Division said. The committee noted that it should be seen where there is an obstacle in the implementation of the agreement.
The committee has summoned the officials of the Foreign Office and the Attorney General on the Iran gas pipeline project in the next meeting
Senator Mushtaq said that India is the largest buyer of Iranian gas. The committee decided to invite Attorney General of Pakistan in the next meeting for detailed deliberation on the matter.
The Senate committee was also briefed on the hike in electricity prices and its impact on the general masses. Chairman NEPRA stated that NEPRA is mandated to provide safe and affordable electricity prices to the consumers and, as of now, consumers have been charged Rs45.06 per unit which includes the taxes mainly as capacity charges, energy charges, and DISCO’s margin.
However, the recent macro economics indicators resulted in increase of Rs3.17 per unit. He further added that the total electricity capacity of the country is around 44000MW, and currently an average of 25000 to 26000MW electricity is being produced in the country out of which a total of 70 pc is being produced by IPPs.
Senator Mushtaq Ahmad Khan inquired as to whether or not the Power Generation license to IPPs is being provided by NEPRA. In reply to that, Chairman NEPRA said that the license to IPPs is provided by the government of Pakistan. Senator Mushtaq Ahmad Khan maintained that the energy crisis of the country cannot be resolved without reviewing the unholy agreements with the IPPs and the recent times have proved that NEPRA has failed to provide affordable energy to the local consumers as per their mandate rather only served as a catalyst, protecting the interests of IPPs.
Senator Saadia Abbasi directed the NEPRA to provide details of Fuel Price Adjustment charges and Capacity Payments being paid to the IPPs in the year 2023. The committee was informed by Chairman NEPRA, that an increase in the value of the dollar by one rupee causes an additional burden of Rs18.5 billion.
“Last time we set the value of the dollar at 185, now it has gone above 285,” chairman Nepra said.
An additional burden of Rs180 billion has been incurred due to the increase in the value of the dollar, said Waseem Mukhtar.
The microeconomic indicator has increased the cost of electricity by Rs3.37/unit, he said and added that economic indicators are not in the hands of NEPRA. By adding new capacity, the tariff will increase, not decrease, Chairman Nepra remarked. Addition of new capacity has increased the cost of electricity by Rs0.17/unit He said that energy cost has declined but capacity payment has increased.
Chairman NEPRA said that Rs160 billion have been lost due to the losses of electricity companies being more than international standard of 4pc. Similarly Rs236 billion have been lost due to less recovery. In addition Rs396 billion were lost due to incompetence of electricity companies, he maintained.
Furthermore, the Senate body deliberated on the proposed increase of gas prices and its country wide utilisation. DG gas said that if gas prices are not increased, gas will be available for two hours in winter. If the gas rates are increased, the authorities of the Ministry of Energy will be in a position to supply gas for eight hours, he added.
The country will lose Rs250 billion by not increasing gas rates in winter, DG gas said.
Officials informed that around 2900 MMcf natural gas is being produced in the country including 400 MMcf from Khyber Pakhtunkhwa, 750 MMcf from Balochistan, 100 MMcf from Punjab and 1650 MMcf from Sindh. Moreover, an average of 28pc local plus imported gas is being utilised by Power Sector, 26pc domestic, 18pc industry and 22pc by fertilizers companies. Senator Saadia Abbasi remarked that fertilizer companies utilise the major portion of cheap natural gas, and yet the local farmers of the country are compelled to buy fertilizers at inflated rate. In reply to that, the official stated that gas to the fertilizer companies has been provided at old prices of Rs302/mmcfd however, the price of urea bag has been doubled as compared to Rs1700 per bag in 2020. It was further added that gas prices are not increased since 2020 and a letter has been written to Petroleum Division for increase in gas prices to ease the circular debt of Rs2 trillion and to meet the gas demands of the upcoming winter season.