Karachi: The Government is likely to allow the Oil and Gas Exploration and Production (E&P) companies to sell 10% of their share of gas to distribution companies and third parties at negotiated prices with prior consent of the government while, the remaining 90% of E&Ps share of pipeline specification gas would be sold to nominated buyers.
According to Alfalah Securities Limited, the government intends to allow E&P companies to contract gas transmission/distribution companies and third parties for sale of their share of gas in Pakistan at negotiated rates.
The basis of the tariff allowed and paid monthly for delivery from outlet flange into the transmission system will be determined by the regulator based upon a rate of return on equity basis at the rate of 12% with the capital cost being amortized over a minimum of 15 years. Allowable costs will include operating cost and interest payable on the initial capital over the minimum 15 years amortization period. The decision bodes well for the E&P companies for having discretion of selling gas and making profit thereupon.