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Deadlock on petroleum and gas issues – Sindh govt refuses to assent new energy policy

Karachi, April 06, 2015 (PPI-OT): The Sindh government has categorically refused to assent the new energy policy of the federal government until and unless the issues of oil and gas pertaining to Sindh are resolved. This decision was taken in a high level meeting held with Sindh chief Minister Syed Qaim Ali Shah in the chair. The meeting was attended by provincial Minister for Finance and Energy Syed Murad Ali Shah, Chief Secretary Mr Siddiq Memon, Secretary Energy Agha Wasif Ali, Principal to CM Alamuddin Bulllo and others.

Provincial Minister for Finance and Energy Syed Murad Ali Shah briefing the chief minister said that the federal government has not yet addressed the reservations expressed by Sindh government on the issues of oil and gas.

Mr Shah further informed the chief minister that the Ministry of Petroleum has convened a meeting on April 7 in Islamabad to discuss the issues of oil and gas which were raised by the Sindh government during the IPC meeting. “The meeting should have been convened by the IPCC Division which is competent to discuss such decisions,” the minister said.

The chief Minister taking policy decision said that the Sindh government would not assent to the new energy policy envisaged by the federal government. “We want that issues pertaining to oil and gas must be addressed first before we convey provincial assent for the power generation policy 2015,” he decided.

It may be noted that the Sindh government had raised the issues pertaining to oil and gas as follows:

1- Provision of natural gas to M/s Engro Fertilizer at concessional rates which has caused financial loss of Rs4-5 billion annually in Gas Development Surcharge (GDS).

2- Issuance of policy guidelines for adjustment of gas tariff for SSGCL/SNGPL. Under this policy Sindh government may lose Rs5 to Rs8 billion rupees annually on account of gas Development Surcharge (GDS).

3- Dismantling of Gas Price Agreement (GPA) of Mari Petroleum Company Limited. This action has also caused huge financial loss to Sindh government as Mari Gas company is a major contributor in gas development surcharge. It is feared that government of Sindh may lose around Rs8 to Rs10 billion annually.

4- Promulgation of Gas Infrastructure Development Cess Ordinance. This ordinance is against the constitution as Supreme Court has already declared GIDC Act 2011 as illegal and unconstitutional.

5- Import of Liquefied Natural Gas (LNG) and its utilisation. The import of LNG would seriously affect energy security of Sindh province. Under Article 158 of the Constitution the province producing oil and gas is to be given precedence over other parts of the country for utilization of gas whereas under swap arrangement natural gas from Sawan and Zamzama gas fields would be diverted to SNGPL network in Punjab.

The chief Minister also directed the Minister for Finance and Energy not to attend the meeting convened by Ministry of Petroleum and inform IPCC division that the meeting may be organized by the IPCC Division.

For more information, contact:
Mr. Allah Bachayo Memon
Press Secretary
Chief Minister House
Tel: +92-21-99202019
Cell: +92-300-3524057 (Ext: 336)

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