ISLAMABAD: The Economic Coordination Committee (ECC) is yet to decide the fate of liquefied petroleum gas (LPG) air-mix plants in Chitral, which were planned by the previous PML-N government,
Earlier, the economic decision-making body decided to stop the installation of all those LPG air-mix plants on which gas utilities had not commenced work.
It asked Sui Northern Gas Pipelines Limited (SNGPL) to exclude the plants already commissioned at Awaran and Bella, and a plant near completion in Gilgit.
However, the ECC decision was silent on the installation of LPG air-mix plants in Drosh, Ayun and Chitral. SNGPL had already commenced work and made significant progress on these projects. The gas utility has already spent Rs500 million on the LPG air-mix plants planned for Drosh, Ayun and Chitral.
The ECC had also directed the Petroleum Division to submit a proposal, in consultation with the government of Balochistan, for the cost-effective provision of LPG to backward areas of the province for ECC’s consideration. SNGPL has informed the Petroleum Division that LPG air-mix plants’ equipment is available with the utility for Drosh, Ayun and Chitral projects. The company has already acquired land at these locations to install the plants.
The gas utility has also obtained construction licences for Drosh and Ayun projects from the Oil and Gas Regulatory Authority (Ogra) whereas the construction licence for Chitral project is expected to be issued soon.
Now, the SNGPL management is seeking guidance from the federal government on whether it should press ahead with these projects or shelve them, which will result in a financial loss to the company.
SNGPL had pointed out that it would require a total of Rs1.481 billion in capital cost. It said that the company had already spent Rs500 million on the projects.
It added that the company would require a subsidy of Rs508 million per annum in FY21 to operate the three plants. It will jump up to Rs1,210 million per annum by FY31 due to the addition of new gas consumers. The SNGPL management said that natural gas consumers would have to bear the burden of the subsidy.
The Petroleum Division has informed the ECC that it can either dispose of the purchased equipment following the committee’s decision taken on March 26, 2020. However, this will result in a loss.
The other option is that SNGPL can execute these projects, which will require subsidy through weighted average cost of gas, ie loading the cost on all consumers.
Published in The Express Tribune, December 23rd, 2020.