Advance purchases and oil tax responsible for rising fuel prices – Business

ISLAMABAD: The Senate Standing Committee on Petroleum was informed on Tuesday that advance purchases and the imposition of the Petroleum Development Levy (PDL) were the main reasons for rising fuel prices in Pakistan despite a decline in the international market.

The committee instructed the authorities concerned to facilitate the import of liquefied natural gas (LNG) by the private sector in order to reduce pressure on the national kitty and introduce competition in the oil sector.

Members of the committee, chaired by Senator Abdul Qadir, also expressed concern over the absence of Oil Minister Musadik Malik and Oil Secretary from the meeting.

“We all believe, regardless of our political affiliation, that it was necessary to take strict measures to reduce oil prices and facilitate the ordinary citizens of Pakistan,” said the chairman of the committee.

Senate body promotes private sector LNG imports to create competition

Responding to questions from committee members about an increase in oil prices despite a drop in global oil prices, oil division officials said the reason for the increase was advance purchases made before oil rates fell. worldwide.

Another reason for the rise in fuel prices was the application of the Petroleum Development Levy (PDL) each month to comply with IMF conditions, officials said.

Meanwhile, Senator Taj Haider, while raising public concern, underscored the need to encourage competition in the fuels sector and said government restrictions on the importation of LNG by the private sector must be deleted.

Briefing the committee, All Pakistan CNG Association Chairman Ghiyas Paracha said the oil and gas market should also be open to private investors.

“Currently, LNG imports were limited to only the public sector and not all companies run by the government sector were as efficient as the private sector – because we don’t have to move files around for days to get a simple permission,” Mr. Paracha said. the committee.

He said foreign exchange worth about 84 billion rupees a year could be saved if the private sector was allowed to import LNG and gas would replace petrol and diesel.

“We have the advantage of selling imported LNG to CNG stations and industry in general, therefore foreign investment will also return to this sector,” he added.

Responding to Mr. Paracha, the Chairman of the Oil and Gas Regulatory Authority said that the market was open and that the regulator was in favor of an open policy in this regard, as it would create competition, improve the efficiency and reduce business costs.

“The policy of opening up will demonopolize the market, which was currently under the control of the public gas distribution companies,” he added.

The company was informed that currently only one private company, UGDC, was able to import LNG.

Sui Southern Gas Company (SSGC) officials said they were in favor of signing an agreement with the UGDC while SNGPL had to obtain the approval of its board of directors.

Senator Qadir issued the decision for a quick resolution of the issue so that the private sector can import LNG.

While Pakistan LNG Ltd officials told the committee that the company was working on short-term and long-term tenders for LNG supply, the feasibility of long-term tenders was not prudent. for the government due to some limitations including adjustments with flexible demand in the country.

The decision in this regard will be taken by the ECC and the federal cabinet meeting.

Posted in Dawn, August 24, 2022

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