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Efforts to restructure

PPL gas tariff on

ASHRAF KHAN

KARACHI: The Ministry of Petroleum and Natural Resources is extensively involved in gas tariff restructuring of Pakistan Petroleum Ltd. (PPL) for the company's privatisation at the earliest.

The ministry will take care of all the concerned aspects of the PPL's gas tariff reforms since it involves 60-65 percent of the total national gas supplies on heavily subsidised cost.

Upfront withdrawal of subsidy can bring about drastic changes in the present gas tariffs for the whole domestic sector as well as some industries, sources said.

With the existing tariff for the PPL's Sui gas field, the largest one on PPL's credit, its sale will offer no attraction to the strategic potential buyer, they said.

The company has already got furnished a gas price agreement (GPA) study in 1998. As a special covenant of the International Finance Corporation (IFC) investment agreement, Coopers and Lybrand of UK had been appointed to carry out the gas price study. The objective of the study was to examine the current workings of, and issues associated with the GPA.

The report of the UK consultant would have its influence on the upcoming gas tariff application, they said. Under the prevailing rate the company earns almost a fixed profit annually.

"The privatisation of PPL could not be proceeded with unless its obsolete gas tariff structure is replaced with the new one", a senior official of the Privatisation Commission said. And the Ministry of Petroleum is continually deliberating on how to do away with the present gas tariff proposition in a prudent manner, he said.

The Privatisation Commission could only play its role after the tariff reforms are furnished by the ministry, he said.

The PPL, according to some industry experts bears a value of about five billion dollars with its gas deposits and infrastructure.