PD seeks Rs260bn to settle RLNG diversion cost

ISLAMABAD: The Petroleum Division (Energy Ministry) has asked the government to allocate Rs260 billion in the next budgetary year to erase the circular debt piled up on account of RLNG diversion to domestic sector.

IMF wants the authorities to settle Rs260 billion amount piled up in the head of RLNG diversion to domestic sector in four winter seasons to ensure maximum gas availability in the country.

A senior official of the Energy Ministry said the cost of RLNG diversion of Rs260 billion to the domestic sector from FY19 to FY22 has not been recovered. It has become part of total circular debt of Rs2.9 trillion in gas sector.

“Out of Rs2.9 trillion, Rs1 trillion had been added because of no increase in gas prices in the last 10 years in the wake of political considerations,” he said.

The caretaker government increased the gas prices twice in the current financial year, from November 1, 2023 up to 193pc and from February 1 up to 67pc to collect Rs980 billion, including RLNG diversion cost of Rs232 billion till June 2024.

“We are hopeful RLNG cost of Rs232 billion to domestic sector in FY2023-24 will be recovered in gas sale tariff,” he said.

The main issue is that about Rs260 billion against the cost incurred on RLNG diversion from Financial Year 2028-19 to 2021-22 have not yet been recovered. This liability will be settled only with the help of budgetary allocation from the federal government, he said.

The official said the government may allocate Rs25 billion against the demand of Rs260 billion in the next budgetary year. This amount will be utilised to slice down the build-up of Rs260 billion burden in a phased manner, he said.

“The government is not extending any kind of subsidy to oil and gas sector. Rather, industrial and high-end consumers are paying the cross subsidy to protected and some non-protected consumers,” he said.

The industrial sector is giving Rs100 billion and high-end consumers Rs30 billion cross-subsidy, he said.