By Asad Cheema
ISLAMABAD: Minister for Energy Senator Musadik Masood Malik on Friday said the Petroleum Division was working out the cost equalization mechanism for a fixed gas tariff to be offered to all the fertilizer manufacturing industries with same price for all to enhance competitiveness and benefits for the farmer community.
Responding a query of Senator Dr Zarqa Suharwardy Taimur during the question hour in the Senate, the minister said all fertilizer companies were not being sold gas at the same prices.
The gas prices for the 10 fertilizer companies operating in Pakistan varied from Rs 170, Rs 580 and Rs1,597 per MMBTU but all of them sold fertilizers at the same price and were also making profits, he added.
“The difference of tariff goes into their balance sheets and all their profitability is listed in the Exchange Commission because these are all listed companies,” he said.
The minister said that the difference in gas prices was mainly due to their contracts as after discovery of every gas well a specific tariff set was adopted, whereas the old gas wells discovered prior to the 2012 regime offered cheaper rates whereas after 2012 new discovery of wells were offering $6 per unit tariff.
The government was working on the cost equalization framework so that all fertilizer companies should operate in a uniform regime with those more profitable, producing at a large scale and more efficient to remain in the market and phase out of inefficient plants, he added.
“We are making a policy on it and the House will have to give its support and guidance on the matter as it will be a hard task that will incur pressure on all. These are the contracts that benefit the companies and deprive the farmers of subsidy benefits,” he said.
The minister said the LNG (liquefied natural gas) tariff was Rs 3,600 per unit , which was unaffordable. It was, propagated that “the Kharif crops will get damaged and urgent production of fertilizer is to be made so a subsidized LNG tariff for fertilizer manufacturing is given to the companies which is cross-subsidised through other LNG consumers next six months’ revenue requirements,” Senator Malik said.
