Gas sector circular debt has hit Rs2.897tr, Senate panel told

ISLAMABAD: The Senate Committee on Petroleum was informed on Tuesday that the circular debt in the gas sector has increased by Rs1,700 billion in ten years and now it has reached Rs2,897 billion.

The Senate body on petroleum held its meeting under Chairman Senator Umar Farooq at the Parliament House on Tuesday.

Petroleum officials told the Senate Standing Committee that due to the failure to increase gas tariff from 2013 to 2023, the circular debt went out of control and reached Rs2,897 billion with an increase of Rs1,700 billion.

The officials said that the flow of increase in circular debt has now come to a halt with the triple hike in gas prices. The official told the committee that there was a gap of Rs800 billion per year in the official purchase and sale price of gas.

Officials of the Ministry of Petroleum said in the briefing that only three major companies owe Rs2,752 billion, which is 95 percent of the total circular debt. Among them OGDCL’s share is Rs1,133 billion, PSO’s Rs816 billion while the share of Pakistan Petroleum Limited in circular debt is Rs803 billion.

The Senate committee was also informed that the indigenous gas reserves are depleting by 10% annually. The committee recommended that complete details of gas consumption by provinces relative to their production be submitted in the next meeting.

The Senate committee on Tuesday deliberated on the bill titled “The Pakistan Minerals Regulatory Authority Bill, 2024” to create cohesion between the Centre and the provinces. Senator Mohammad Abdul Qadir, the bill’s mover, stated that while the country has vast mineral reserves, it has not benefitted from them due to a lack of coordination between the federal and provincial governments. He added that the primary objective of the bill is to create cohesion between the Centre and provinces on this issue so that the potential of minerals sector can be fully utilized and transformed into a value-added commodity for the national economy.

Secretary petroleum apprised the committee that the ministry was working on the “Harmonization of Minerals Laws” with the provinces, and the implementation plan will be finalized by the end of September 2024.

The DG Gas reported that the country’s daily consumption of gas and oil was around 3,200 MMCFT and 7,000 million barrels, respectively. However, the total reserves of oil are approximately 192.93 million barrels, and gas reserves are about 18,108.77 BCF. He said that Sindh holds the highest share of gas at 64%, and Khyber Pakhtunkhwa has a 42% share in oil, according to the 2023-24 data (May 2024).

Secretary Petroleum Division, Momin Agha, highlighted that out of the total 3,200 MMCFT of gas, 200 MMCFT is used for production, 1,400 MMCFT is utilized by fertilizer and power companies, and the remaining 1,600 MMCFT is allocated for domestic purposes. “Thus, the total available gas is 3,000 MMCFT,” he told the committee.

Officials stated the ministry has mandated oil and gas companies to spend a minimum of $30,000 on social welfare projects, primarily for clean water, education, and healthcare.

Chairman Senate Committee on Petroleum Senator Umar Farooq directed that details of social work done by oil and gas companies in different parts of the country over the last three years under Corporate Social Responsibility be presented.

Additionally, the committee was briefed by the MDs of Sui Southern Gas (SSGPL) and Sui Northern Gas (SNGPL) on their operations and performance.

The secretary of the Petroleum Division apprised the committee that thirteen companies fall under the ministry’s ambit. He told the committee that the primary role of the ministry is to facilitate collaboration between these companies to meet the country’s oil and gas demand. The ministry also oversees the affairs of these companies and formulates policies for their smooth functioning.

The Senate Committee on Petroleum raised objections on failure to appoint MD OGDCL for the past few months and directed to provide the committee details on vacant MD and Board of Directors positions in these companies. The committee decided to have an exclusive briefing on Reko Diq at the next meeting.