ISLAMABAD: The Senate Standing Committee on Petroleum recommended to the government on Friday that private parties should be allowed to import liquefied natural gas (LNG) which would not only improve its availability but would also bring down prices through competition.

The committee met in the Parliament House under the chairmanship of Senator Mohammad Abdul Qadir who recommended that officers from the Ministry of Energy (Petroleum Division) reach out to international companies and encourage them to invest in the energy sector of Pakistan.

Mr Qadir said that since 2015, the government has been purchasing LNG from only two or three bidders even though there were numerous sellers worldwide.

“Allowing private entities in this sector could make the price more competitive,” the committee chair noted.

Petroleum Secretary Momin Agha assured the committee that they were looking forward to a comprehensive plan and policy review in this regard.

The ministry officers informed the committee that the Oil and Gas Regulatory Authority (Ogra) determines margins for LPG producers and marketing companies and prices for the consumers.

The pricing was based on various parameters, including the producers’ price per tonne, which is determined every month according to the Saudi Aramco Contract Price of 40pc Propane and 60pc Butane.

The distribution margin is fixed at Rs35,000 per tonne, equivalent to Rs413 per cylinder, and there was a petroleum levy on indigenous production at Rs4,669 per tonne, translating into Rs55 per cylinder.

The GST, previously at 17pc, has now increased to 18pc since February 2023, which applies to the mentioned parameters.

The committee members discussed the suspension of gas supply to industrial units in Sindh for two days a week, causing a production loss of 28pc, as well as a delay in the completion of production orders.

The committee was informed that the total recoverable resources of natural gas are depleting more than 10pc every year while the demand is increasing constantly.

This year, Sui Southern Gas Ltd was receiving around 90mmcfd less gas compared to last year, and the secretary petroleum added that the decline has been continuous for the last 8 to 10 years, and they are looking forward to a comprehensive plan that would scrutinise policymaking.

Ogra Chairman Masroor Khan briefed the committee on the increase in oil and gas prices, and Senator Saadia Abbasi pointed out that the rise in cylinder prices was attributed to new taxes.

Published in Dawn, December 30th, 2023