LAHORE: Former prime minister Shahid Khaqan Abbasi has urged the government to use caution when implementing weighted average cost of gas (WACOG) under the Oil and Gas Regulatory Authority (Second Amendment) Bill to ensure its judicious use.
Talking to The News on Friday, Abbasi, who held the portfolio of the Petroleum Ministry during last tenure, observed that WACOG was not about the country, rather it was about the gas consumers. “It will be beneficial for some consumers and the others will lose out.”
Therefore, he warns, WACOG needs to be applied carefully otherwise it would skew the system in favour of those who need it the least. Despite being the central leader of opposition’s Pakistan Muslim League-Nawaz, he did not oppose the move, which aims to implement average cost of imported regasified liquefied natural gas and local or system gas.
It is believed by many that uniform gas tariff across the country under WACOG might be an essential way to end distortion. But it simply means higher rates for gas producing provinces, which poses as a challenge for the centre with far reaching political and administrative repercussions.
Energy Minister Hammad Azhar however dies not agree with this notion. Dependence on LNG has been on the rise in all provinces.
In fact, he added that all expansion in gas industrial networks in even gas producing provinces was on full LNG rates. But given the declining trend in availability of system gas, he estimated that “all provinces will be short of natural gas in a couple of years”.
So, this reform was the need of the hour to ensure uniform pricing mechanism across the country. He admitted that right now local gas rates in all provinces were the same.
Earlier in the day, Azhar termed WACOG a game changer reform in the gas sector. “It will have wide ranging and positive effects not just for gas pricing and enhanced supplies but also for the efficiency of the power sector,” he opined.
Sindh Energy Minister Imtiaz Ahmad Shaikh however criticised the federal government on introducing WACOG. In a post on a microblogging site, Shaikh said the bill violated the Constitution.
Terming it a conspiracy to escalate tensions between the federation and provinces, he went ahead and said that the Pakistan Tehreek-e-Insaf government had become a threat to the federation.
He was of the view that passing the controversial bill would not avert the ongoing gas crisis. “PTI government is creating a hostile situation between the federation and Sindh province instead of resolving the gas crisis.”
Former federal energy secretary (Power Division) Irfan Ali said that with the passage of legislation, LNG would be treated as gas, “which is a good decision”.
He also said tariff of RLNG would be more competitive after implementation of WACOG.
He stressed the need to fully utilise LNG import facility to reduce dependence on furnace oil and diesel. Summing up his comments, he said gas tariff-related reforms were indispensable.
“If you are using LNG in the country, its price will ultimately be factored in while calculating natural gas tariff. So by declaring LNG as gas, not
only an anomaly is removed but disparity in its rates would end,” he concluded.
It should be noted that the Senate on February 17, 2022 passed the Oil and Gas Regulatory Authority (Second Amendment) Bill, which was said to help the government implement the weighted average cost of gas in the country.
It has been called the pricing mechanism that takes into account the blended costs of both indigenous and imported gas as opposed to the current pricing method, which ring-fences the use of imported fuel to certain categories of consumers.
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