ISLAMABAD: The domestic sector has become one of the biggest clients of RLNG in the country and in this winter season, the costly RLNG of 1.362 billion cubic feet is once again being injected to…ShareNext Story >>>
ISLAMABAD: The domestic sector has become one of the biggest clients of RLNG in the country and in this winter season, the costly RLNG of 1.362 billion cubic feet is once again being injected to avoid loadshedding in four months of winter season, but and the diversion of gas to domestic consumers has so far caused huge surge in circular debt of about Rs108 billion, reveals official documents available with The News.
“The diversion of RLNG to domestic sector to avert gas loadshedding will aggravate circular debt situation more in RLNG sector,” a senior official at Petroleum Division told The News. “However the government is left with no option but to inject RLNG to domestic sector to keep away gas loadshedding,” he argued.
He said Sui Northern has emerged as the biggest victim of the circular debt in LNG sector as its payables to Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL) have soared to Rs108 billion in toto. Last year, the cost of RLNG amounting to over Rs19 billion has not yet recovered.
And if this time the government injects the costly RLNG amounting to Rs54.5 billion as worked out by the Petroleum Division officials, then over Rs30 billion will not be recovered as the 40 percent of RLNG cost will be recovered in next summer season because of gas swap mechanism. The unrecovered cost of RLNG amounting to Rs30 billion will appear in circular debt in LNG sector which will further jack up circular debt to over Rs138 billion. However, according to Power Division officials, circular debt in power sector has soared to over Rs1.6 trillion as the payables of power sector stands at Rs800 billion and over Rs856 billion amount is required to pay in the head of loans and liabilities parked in Power Holding Private Limited (PHPL).
“We have worked out the impact of diversion of RLNG to domestic sector in last and ongoing years which stands out Rs50 billion,” a relevant official in Petroleum Division told, and added: “A proposal is under consideration that the impact of Rs50 billion will be recovered from the domestic consumers in next two years in staggered manner and according to estimate, the increase in gas tariff for domestic sector of Punjab, and KP will be at Rs30 per mmbtu.”
However, the summary is not yet finalised to this effect, but it will be ready for ECC by next week for approval. It is pertinent to mention that the government has given undertaking to donor agencies (IMF and World Bank) that RLNG price will remain ring-fenced and cannot be diverted to domestic sector, as the full price of RLNG cannot be recovered from residential consumers.
A top official while quoting the document said that the expected injection of RLNG of Rs1.362 billion cubic feet will be made during five months of winter season. The expected injection of RLNG in domestic sector in November 2019 has been worked out at 138 mmcfd, in December 266 mmcfd, in January 474 mmcfd, in February 386 mmcfd and in March 130 mmcfd.
