60 LPG air mix plants to be set up; Burden to be passed on to existing consumers
In a bid to ensure smooth supply of gas to the consumers in remote and hilly areas across the country, the government has planned to set up 60 LPG air mix plants.
The Economic Coordination Committee had already approved installation of 30 LPG air mix plants. Now the Petroleum Division was seeking approval of tariff for 60 LPG air mix Plants worth Rs 31 billion. The move, however, can put burden on the existing gas consumers due to its high cost which may provide the opposition parties a chance to come hard on incumbent government which has been faced with charges of money laundering and corruption.
Some impact of expensive LPG through air mix plants would be passed on to the end consumers using natural gas which can further put burden on the existing gas consumers across the country.
According to detail available with Pakistan Observer, the impact of weighted average cost has been worked out at Rs 7.21 per mmbtu for 27 projects on SSGCL and Rs 13.1 per mmbtu for 24 projects on SNGPL system.The gas companies had proposed 9 more LPG air mix plants on system of both gas utilities and this tariff has also been proposed for these new proposed projects.
It is worth mentioning here that during the tenure of the Pakistan Peoples Party (PPP) government, LPG air-mix plants were approved at a higher rate which sparked controversy. At that time, Ogra estimated that air-mix could be injected into the Sui Southern Gas Company network at a cost of $25 per million British thermal units (mmbtu) as LPG prices were high.
The PPP government had planned to calculate LPG prices on a weighted average basis and as a result all consumers, except for domestic consumers, were expected to face a price hike of up to 9.9% with the injection of 50 million cubic feet of LPG air-mix per day as approved by the ECC.
However, government of PML-N has worked out to bring down LPG prices. Government is also going to regulate the market to make the commodity affordable for the consumers. Therefore, the officials suggest, it would be feasible to inject LPG into the pipeline network of gas utilities when prices stand lower.
In the past, Ogra had opposed the scheme, arguing that air-mix plants would spark a sharp rise in gas prices for the end-consumers. It, however, insisted that to protect the consumers, the air-mix plants should work as a standalone and be not made part of the larger system.
Economic Coordination Committee had already given blanket approval of 30 LPG air mix plants.Now petroleum division was seeking approval of tariff for 60 LPG air mix Plants.The total cost of these plants has been worked out at Rs 31 billion.
Earlier, government planned to set up 30 liquefied petroleum gas (LPG) air-mix plants with the assistance of gas utilities in Murree, Gilgit, other hilly areas in the north and Azad Jammu and Kashmir (AJK) where the laying of natural gas distribution network is not considered economically feasible, officials say.
In fresh proposal, petroleum division seeking approval of tariff for 60 LPG air mix plants.
These areas have a sizeable number of domestic and commercial consumers who are burning wood to meet their cooking and heating requirements, which in turn is causing rapid deforestation in the country.
According to the officials familiar with the developments, comprehensive site surveys have been conducted to select potential points for the establishment of air-mix plants.
Pakistan faces an acute shortage of natural gas both for electricity generation and general consumption. The domestic production of 4 billion cubic feet of gas per day (bcfd) could not meet the growing demand as the gap between supply and demand stands at around 2 bcfd and is continuously widening.
The energy scarcity is not only causing hardships for the common people but is also slowing down economic growth. To tackle the challenge, the government is working on a plan that will provide gas through LPG air-mix plants to the areas where piped gas is not economically feasible.