ISLAMABAD : The Economic Coordination Committee (ECC) of the Cabinet has increased gas rates of captive power plants by 16.6 per cent from Rs 3000 per mmbtu to Rs 3500 per mmbtu to ensure required revenue for the gas sector.
Presided over by Finance Minister, took this decision on a summary submitted by Petroleum Division for an upward revision of the indigenous gas tariff for industry (captive power) as well as non-protected domestic slabs.
The meeting was chaired by Federal Minister for Finance Senator Muhammad Aurangzeb with Federal Minister for Petroleum Mr. Musadik Masood Malik, Minister for Power Sardar Awais Ahmed Khan Leghari, Minister of State for Finance and Revenue Mr. Ali Parvez Malik, Chairman OGRA, Chairman SECP, Federal Secretaries, and senior officers from the relevant divisions in attendance.
The ECC following a through discussion decided to approve upward revision in gas tariff for captive power plants from Rs 3000 per mmbtu to Rs 3500 per mmbtu to ensure required revenue for the gas sector during FY 2024-25, but it did not agree to increase the tariff for domestic consumers with a view to protecting the domestic consumers from additional burden. The ECC, however, instructed the Petroleum Division to take necessary measures for the imposition of a grid transition levy on the captive power plants to enhance the energy sector efficiency.
Asim Riaz, a representative of APTMA said the rate for General Industry (captive) is set at Rs. 3,500 or $12.54/MMBtu (FX 279), while the RLNG distribution price for January 2025 is $12.67/MMBtu for SNGPL, showing a marginal difference of just 13 cents. It is important to note that the RLNG price for captive users includes miscalculated UFG, an illegal fertilizer subsidy, and high port charges.
Should the RLNG notified price drop by more than 13 cents in the future, owing to low Brent price forecasts for FY25 or PKR appreciation to 276, the PKR 3,500/MMBtu tariff for industrial consumers would exceed OGRA’s RLNG notified price.
Allocating indigenous gas to industrial consumers at a price higher than RLNG is totally irrational and ridiculous. Pricing and allocation of System/indigenous gas should be determined by market dynamics, not by the whims of men.
A representative of KATI, Rehan Jawed is of the view that the increase in captive power prices stems from the misconceptions propagated by various captive users and their inflated calculations of genset efficiency. These gensets typically operate at only 38 to 40 percent thermal efficiency, meaning they generate just 38 to 40 percent electricity from the total energy value of the gas/RLNG supplied to them (essentially the same fuel). Unlike combined cycle systems, where the sole output is electricity, some captive gensets employ waste heat recovery models, while others do not.
An analyst, Samiullah Tariq said that increase of tariff to Rs 3500/ mmbtu plus tax will be applicable on CPPs. Ends
