Zafar Bhutta

Oct 312017
 

ISLAMABAD: The government on Tuesday passed on to the consumers the full impact of increase in the prices of petrol and high speed diesel in the global market. It decided to raise the price of petrol by Rs2.49 per litre, high speed diesel (HSD) by Rs5.19, kerosene Rs5.19 and light diesel oil (LDO) Rs3 per litre with effect from November 1. During the past several months, the government had been passing on a partial impact of increase in international prices of diesel and petrol and keeping unchanged the prices of kerosene and light diesel oil. However, a partial increase in price of kerosene was made last month. Now, the government has given up its policy of making partial increase in oil prices to provide relief to consumers and passed on the full impact of the hike in the international rates of petrol and diesel. The crude oil prices witnessed an increase from $52 per barrel to $60 during October. Following this trend of hike in oil prices, the Oil and Gas Regulatory Authority (Ogra) had recommended an increase of Rs5.19 per litre in the price of high speed diesel (HSD) and Rs2.49 per litre of petrol for November – 6.5% and 3.4% respectively. According to a working paper forwarded to the Energy Ministry (Petroleum Division) and the Ministry of Finance, the regulator proposed an increase of Rs15.99 per litre (33.3%) in price of superior kerosene and Rs12.63 (27.5%) in light diesel oil. Following the increase, petrol price went up to Rs75.99 [Read More…]

Aug 232017
 

ISLAMABAD: The regulatory body for power producers and distributors has announced a reduction of Rs1.70 per unit in electricity tariffs for July 2017, taking cue from cheaper fuel prices in the international market. Following the tariff cut, electricity bills of consumers for September 2017 will reflect fuel price adjustment charges. Overall, power producers will refund around Rs20 billion to the consumers. However, K-Electric and agricultural consumers as well as domestic consumers that use less than 300 units of electricity per month will not enjoy the relief. The National Electric Power Regulatory Authority (Nepra) took the tariff cut decision during the monthly public hearing on Wednesday following a petition filed by the Central Power Purchasing Agency (CPPA), which sought a reduction of Rs1.7090 per unit. NEPRA, power ministry fail to agree on amendments to regulations According to Nepra, the fuel cost of electricity delivered to the distribution companies was calculated at Rs4.78 per unit in July against the reference price of Rs6.49 per unit, which suggested that the consumers were entitled to a refund of Rs1.70 per unit. As the power distribution companies had recovered an extra Rs20 billion through electricity bills for July, these would be refunded to the consumers in September bills. Total energy generation in the country from all sources stood at 12,496.63 gigawatt-hours (GWh) in July at a cost of Rs58.65 billion. The post NEPRA cuts power tariff by Rs1.7 per unit appeared first on The Express Tribune. Click for detailed story

Jul 312017
 

ISLAMABAD: With no competent authority in place following Nawaz Sharif’s disqualification, consumers have been deprived of relief in oil prices as the government on Monday decided to keep oil prices unchanged. In a short statement, spokesperson of the Finance Division said that considering the special circumstances, rates of petroleum products would be maintained at the existing level till a decision by the competent authority. Officials said that finance division had moved a summary to the law division for an advice whether the president could give an approval of revision in oil prices in absence of the prime minister and the federal cabinet. In reply, the law division said that the president could accord approval but failing to get an approval in the short time, the finance ministry announced to continue with the existing prices. In PM’s absence, decision to cut petroleum prices in limbo In the past, the prime minister had been giving approvals to oil price revisions. But following Nawaz Sharif’s disqualification by the apex court, finance ministry was confused as to which authority to turn to for the final nod. Oil consumers were expected to get a reasonable relief in August as the industry regulator has suggested a reduction of 6.3 per cent in prices of petroleum products in line with the global market trend. The cut in prices has been proposed in petrol and diesel which are in major use of consumers. However, the regulator has proposed an increase in prices of kerosene oil and light diesel oil [Read More…]

May 312017
 

ISLAMABAD: The government has cut the prices of petrol and high speed diesel (HSD), effective from June 1, 2017. However, the prices of light diesel oil (LDO) and kerosene oil have been kept unchanged for month of June. The new prices have been announced after getting a nod from Prime Minister Nawaz Sharif. With the fresh cut of Rs1.20 per litre, the price of petrol has come down to Rs72.80 per litre from Rs74 per litre. And with diesel getting cheaper by Rs1.60 per litre, the new price will be Rs81.40 per litre as against Rs83 per litre earlier. However, the prices of kerosene oil and LDO have been maintained at the existing level of Rs44 per litre. Price cut likely for petrol and diesel According to the calculation by the Oil and Gas Regulatory Authority (Ogra), the prices of petrol and high speed diesel were to be reduced by Rs2.43 per litre and Rs3.31 per litre respectively, and the prices of LDO and kerosene oil were to be raised by Rs9.28 and Rs13.54 per litre respectively. The Ogra had sent its recommendations to the Ministry of Petroleum on Tuesday. According to sources in the finance ministry, the government has absorbed the impact of price increase since April 2016 and has suffered considerable loss of revenue; and since December 2016, only partial increase had been passed on to consumers. In line with the directives of the prime minister, it has been decided that recommended increase in kerosene and LDO will not [Read More…]

Dec 092016
 

ISLAMABAD: The government has planned to relax rules governing public procurement and the bidding process in a bid to award multibillion-rupee contracts without facing obstacles, say officials. Earlier, the government has drawn flak for violating public procurement rules in the award of lucrative contracts. For instance, a liquefied natural gas (LNG) terminal-building contract given to the Engro group by the Economic Coordination Committee (ECC) sparked scathing criticism of the government, which was forced to float a tender. The cabinet, in its meeting held on November 23, considered a proposal for amending the public procurement rules of 2004. It reviewed a summary submitted by the Cabinet Division for amendments and constituted a committee to make changes to the Public Procurement Regulatory Authority (PPRA) Ordinance 2002 and PPRA Rules 2004. The committee will be headed by Water and Power Minister Khawaja Muhammad Asif and comprise Law and Justice Minister Zahid Hamid, Railways Minister Khawaja Saad Rafique, States and Frontier Regions Minister Lieutenant General (Retired) Abdul Qadir Baloch and Finance Secretary Dr Waqar Masood. The cabinet was informed that consultations had not been held with public-sector organisations that made big procurements and it would be appropriate to address their concerns while amending the PPRA ordinance and rules. Section 26 of the PPRA Ordinance 2002 gives powers to the federal government to make rules for meeting purposes of the ordinance. The PPRA board, in its meeting held on October 19, 2016 had also decided to introduce certain amendments to rules 12, 42 and 45 of [Read More…]

Sep 122016
 
Abandoned by world, low-grade petrol runs Pakistan

ISLAMABAD: Ever wondered why even your brand new car does not perform optimally? Why your engine gives off knocking sounds in higher gear? And despite countless trips to an auto mechanic, why can your car just not be efficient? The problem lies in the fuel. The standard petrol used by the majority of Pakistanis is of such low grade that it is only consumed in Somalia in the world. This startling disclosure was made by Petroleum Minister Shahid Khaqan Abbasi in a recent meeting of the Economic Coordination Committee (ECC), the country’s highest economic decision-making body. Quality of petrol is measured in the amount of octane, normally indexed as the Research Octane Number (RON). In simple terms, the higher the octane number, the higher the performance of gasoline engines. Use of low-octane petrol leads to engine knocking. While fuel pumps across Pakistan continue to sell RON 87 petrol as the standard, the world moved ahead years ago with almost all countries now running at least on RON 92 petrol. Modern automobiles, especially those with super-charged engines, are designed to operate on RON 92 or even higher rated gasoline. The high octane blending content (HOBC) sold in Pakistan is RON 97. Officials say the Pakistani refineries produce poor quality petrol and the same quality is imported by the state-run Pakistan State Oil (PSO). International oil suppliers, they allege, export poor quality petrol to only Pakistan and Somalia and this is the reason the vehicles give low mileage and are inefficient. According to [Read More…]

Sep 022016
 
Uncertainty: GHPL on bumpy ride as debt grows, funds choked off

ISLAMABAD: It is not going to be easy for Government Holdings Private Limited (GHPL) to run its affairs as it has got trapped in a huge pile of circular debt and the flow of funds to strategic projects has been choked off, officials say. The government has set up new subsidiaries of GHPL namely Pakistan LNG Terminal Limited and Pakistan LNG. The former is tasked with developing a new liquefied natural gas (LNG) terminal whereas the latter is going to make LNG imports. GHPL – a relatively small petroleum exploration company wholly owned by the government – has got stuck following the demand of a hefty pay package of Rs10.25 million per month by new Managing Director Shahid Islam. Islam, however, had been a key player in striking a $15-billion LNG import deal with Qatar. Earlier in January 2015, he was given the charge of acting managing director of Pakistan State Oil (PSO) as all high-ups of the oil marketing company had been suspended because of acute petrol shortage. He held the slot for six months and was replaced after striking all big LNG deals. Of the companies managed by the Ministry of Petroleum and Natural Resources, Oil and Gas Development Company, Pakistan Petroleum Limited and PSO are large ones and play a bigger role in the petroleum supply chain. According to officials, the PSO managing director is receiving the highest pay package of Rs5 million among these companies, which is less than half of what was demanded by the GHPL [Read More…]

Aug 312016
 
Court of arbitration: Pakistan wins case against LPG terminal operator in London

ISLAMABAD: Pakistan has won a case in the permanent court of arbitration in London filed by LPG terminal company Progas with $573 million in damages claims against the government, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi announced on Wednesday. Progas had set up an LPG terminal in 2004, but it was shut down in 2008. As a result of failure of the business, Progas filed two claims against the Government of Pakistan – one each in Paris and London, holding the country responsible for the loss. Abbasi said Ali Allawi, the UK-based major shareholder in Progas and brother of a former prime minister of Iraq, filed a damages claim of $70 million and other claims amounting to $503 million were filed by Progas. They invoked the Bilateral Investment Treaty while filing the claims. He said the petitioners claimed that Pakistan government had interfered in the setting of LPG prices from 2004 to 2008 and that made their business unviable. In order to recover the money borrowed by Progas, banks auctioned its assets in 2011 and consequently state-owned Sui Southern Gas Company bought the LPG terminal. According to Abbasi, the current government clubbed the two cases in London and made efforts to pursue and win them. After three years of hearings, the permanent court of arbitration gave its decision and dismissed the case against the Government of Pakistan. He revealed that the court also ordered the petitioners to pay $11 million to Pakistan to cover the expenses it incurred during proceedings [Read More…]

Jul 152016
 
Unending woes: Power firms plagued with losses, low revenues, govt admits

ISLAMABAD: The Ministry of Water and Power has acknowledged that power companies are still plagued with high losses, outstanding payments, low revenue collection and more reliance on expensive thermal power production, which have led to a reduction in overall electricity generation and prolonged outages. In a meeting of the Econo­mic Coordination Committee (ECC) on June 28, representatives of the ministry said power distribution companies were still finding it difficult to clear long outstanding dues of the Central Power Purchasing Agency (CPPA). For the inability of power companies, they blamed high distribution losses, less subsidy, low revenue collection, lower applicable tariff and increase in thermal power generation. This admission of failure on the part of power ministry comes in the backdrop of Pakistan Muslim League-Nawaz’s (PML-N) election campaign in 2013 when it hit out at the ruling Pakistan Peoples Party for being unable to control prolonged load-shedding and promised to bring outages to an end after coming to power. “These issues were adding to the cost of generation and were affecting cash flow of distribution companies, limiting their ability to settle their power purchase liability towards the CPPA,” the ministry told the ECC. “Therefore, the CPPA cannot pay the power purchase cost to the independent power producers (IPPs) and generation companies, which ultimately leads to a drop in power generation and increase in load-shedding.” The power distribution companies were in such a poor financial health due to bad governance and inefficiency that the ministry was compelled to seek an extension in the [Read More…]

May 312016
 

ISLAMABAD: Paying heed to opposition from the Ministry of Finance, the government has stopped short of approving a proposal for allocating gas supply to Engro Fertilizers from Mari Petroleum Company and providing unutilised gas in the Habib Rahi reservoir to other fertiliser manufacturers. The Ministry of Finance did not endorse the proposal tabled by the Ministry of Petroleum and Natural Resources for discussion in a meeting of the Economic Coordination Committee (ECC) on May 23. The petroleum ministry was seeking allocation of 31 million cubic feet of gas per day (mmcfd) for Engro Fertilizers from the output of Mari Petroleum. It also suggested that any unutilised gas in the Habib Rahi reservoir could be supplied to the fertiliser industry connected to the Mari Petroleum network. Finance ministry opposes Mari gas supply to Engro Mari Petroleum started supplying 585mmcfd from the Habib Rahi reservoir on February 9, 2016 including 60mmcfd for power generation company-2 (Genco-2) and 33mmcfd for fertiliser plants – Fauji Fertilizer and Fatima Fertilizer – to partially make up for the gas curtailment. Later, the ECC, in its February 18 meeting, agreed on diverting 60mmcfd from Genco-2 to the fertiliser manufacturers as originally it was earmarked for that industry. Of the total, 34mmcfd was supplied to Fauji Fertilizer, 13.5mmcfd to Fatima Fertilizer and 12.5mmcfd to Engro Fertilizers. Mari Petroleum has continued to release required gas for Engro in a bid to avoid shutdown of the fertiliser plant. In the meantime, Engro requested Mari for additional gas supply after meeting needs [Read More…]

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