ISLAMABAD: The government is going to allow the country’s oil and gas exploration and production (E&P) companies — OGDCL, PPL, GHPL, Mari gas, and foreign companies — to directly sell 50 percent of gas to the private sector and 50 percent to state-owned gas companies.
This initiative would not only help reduce the financial morass of the E&P companies that emerged in the wake of their circular debt because of non-payments by Sui gas companies, but also would have fiscal relief because of selling gas directly to the private sector, Caretaker Energy Minister Muhammad Ali said in an interview with The News.
The private sector may pay the E&P companies in advance providing fiscal space enabling them to increase exploration production activities in the country for more discovery of oil and gas. The Petroleum Division has also prepared a tight gas policy for approval under which 500mmcfd to 1,000mmcfd tight gas can be explored in two to three years. A 40 percent premium over the respective zonal price of Petroleum Policy 2012 will be given to the producers of tight gas reserves.
The top mandarins have also started working on the new LPG policy and its infrastructure plan which will soon be pitched in the meeting of Cabinet Committee on Energy. He said that in the month of January, the caretaker government is expecting the increase in gas price by Ogra. The increase in gas price will be used to reduce the stick of gas circular debt. The minister hinted at the nominal increase in gas prices to be effective from January 1, 2024.
He said that Saudi Aramco has shown interest in the building of a crude-to-chemical petrochemical complex in Pakistan instead of a green refinery, adding that Saudi Arabia has started keeping itself from the refinery business and investment globally.
“KSA is very interested in investing in the mining, oil and gas sector, and renewable energy. Saudi Arabia will invest in the Reko Diq project and the agriculture sector as well,” he said.
In the mid of November 2023, circular debt spiked to Rs2.7 trillion but after payment settlements of Rs300 billion, the circular debt in the power sector as of December 31 stands at Rs2.4 trillion. Right now, the caretaker minister said, the industrial sector is providing a cross-subsidy of Rs244 billion to some sections of domestic consumers.
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