Govt mulls uniform gas pricing for all consumer categories

• Government to introduce uniform gas pricing, ending industrial cross-subsidies.
• Reforms to cut costly power projects and shift captive plants off gas.
• Plans to privatise 3 power distributors, launch private power market by 2025.
  

ISLAMABAD: The government is working to implement a uniform gas pricing system for all consumer categories, with a final decision expected in one to two months, The News reported.

This change would end the current cross-subsidy where the industrial sector supports domestic and commercial consumers.

Federal Minister for Power, Sardar Awais Ahmad Khan Leghari, shared this update at the launch of the “Socioeconomic Insight and Analytics (SIA) on In-House Power Generation for Industry and its Economic Impact” study. He stressed the importance of establishing a consistent gas pricing structure across sectors.

The minister said that though the issue of the captive power plants is very sensitive which are being connected to the national grid and would be disconnected from gas supply, it has been agreed with IMF and developing agencies fortunately or unfortunately. 

He disclosed that the latest IGCEF (Indicative Generation Capacity Expansion Plan) is being reversed and many projects having costly power tariffs are being omitted which were made part of IGCEF in violation of the least cost project formula.

The minister also disclosed that the Central Power Purchase Agency (CPPA)-G would not sign any power purchase agreement for more electricity during the incumbent regime.

Leghari highlighted the challenge of future projects which will add 17000MW to the system in the next 10 years knowing the fact that the country is surplus of electricity as its installed capacity stands at 43000MW and peak demand is 25000MW in June-July during the summer season. 

“We, however, would have to purchase the electricity of Mohmand Dam. More importantly, the government has to purchase the imported electricity from Tajikistan, Kyrgyzstan under CASA-1000 project. The new addition of 17000MW in the system would result in more hike in the power tariff and would make the power sector more unsustainable."

The minister also mentioned the bitter fact that out of 17000MW, only 87MW of electricity will be in the system under a least-cost formula and the remaining projects are to be with high tariffs.

He prayed that CASA-1000 would not sail through the territory of Afghanistan for one or the other reason, otherwise, it would increase the government’s liabilities in result of purchasing electricity from central Asian states. 

He said that the previous governments signed a questionable agreement under CASA-1000 project under which, the country would purchase 42 billion units in every summer season, but there is no clause in the contract that Pakistan could also export its additional electricity through this project in the winter season. 

The minister also posed the question as to why CPPA purchased the costly electricity from the future project of Diamer-Bhasha Dam.

The minister pointed out that solar panels are being installed on roofs at a fast pace in the country and about 3200MW has been added through solar panels and the national grid system is providing them the service of battery storage. 

He said that it is high time to rationalise the solar tariffs and to this effect, the government functionaries are working to lower the tariff of solar panels and increase the national grid electricity for those who are in business with the government through net metering.

The minister said that the government is in talks with IPPs to voluntarily bring them on take and pay mode instead of the existing take or pay mode after mutually agreeing.

The minister while pinpointing the failure to attract a reasonable bid price for PIA privatisation despite the good efforts, also stressed his resolve that the government is committed to privatise three electric power distribution companies and handing over three to the private sector on concessional agreements. 

He said that in June the government would succeed in getting EoIs to this effect.

The minister also said that the government is now focusing on developing the private power market—CTBCM and to this effect federal cabinet has made ISMO which will be operational by January or February 2025.

He also informed that Imranul Haq, former PSO managing director, has been appointed as Managing Director of PPMC Power Planning and Monitoring Company (PPMC) to increase its capacity for financial modelling of the power sector.