PD clarifies CPP levy adjustments to be reflected in future bills
Earlier, the division instructed gas utilities to initiate billing of CPP's consumers under the newly enacted Grid (Captive Power Plants) Levy Ordinance, 2025. The move marks the formal commencement of levy collection from captive power users for the month of February 2025.
The division further instructed that the billing must be carried out in accordance with Section 3 of the ordinance, which mandates a levy on gas consumption by captive power plants not connected to the national grid.
Grid Transition Levy: APTMA urges PD to address inaccuracies
In an earlier letter it was directed to relevant gas distribution companies to ensure compliance without delay and urgently report the total amount already billed or to be billed to the concerned authorities.
The ordinance, promulgated earlier this year, is part of IMF's commitments that aimed at discouraging inefficient captive power generation and encouraging industrial consumers to shift toward the national electricity grid.
Copyright Business Recorder, 2025
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Circular debt: Pakistan govt moves to cut LNG import, reform gas sector
ISLAMABAD: The government is fine-tuning reforms in the gas sector, including the reduction of two LNG cargoes per month, along with other measures aimed at bringing the circular debt flow of the sector to zero, well-informed sources in Petroleum Division told Business Recorder. Currently, the gas sector's circular debt stands at around Rs 2.6 trillion, mainly due to lower RLNG consumption by the power sector. The International Monetary Fund (IMF) has directed the government to eliminate the gas sector's circular debt flow. The fourth meeting of the committee was held on August 8, 2025, under the chairmanship of the Minister for Petroleum at the Task Force Headquarters, Army Air Defence HQ, Westridge, Rawalpindi. The meeting was attended by Advisor to the Prime Minister on Privatization, Lt-General Zafar Iqbal, Secretary Petroleum, and representatives of OGRA. IMF delineates steps to address gas circular debt The Petroleum Minister briefed participants on his recent meeting with the Prime Minister, during which the Task Force on Power presented issues arising from reduced LNG off take by the power sector. He emphasized the need for a clear strategy ahead of the planned visit to Qatar. The Minister also updated the forum on the progress made in the previous three committee meetings, where the work of four sub-committees was reviewed: Sub-committee 1–led by the Secretary Power, tasked with making recommendations on LNG demand synchronisation for power plants. This includes improved forecasting and coordination, as well as addressing queries raised earlier regarding Energy Purchase Price (EPP) comparisons between imported coal and RLNG. Sub-committee -2 –progress on the Gas Circular Debt Management Plan (CDMP), to be presented by the Advisor to PM on Privatization. Sub-committee 3 led by the Secretary Petroleum Division, focusing on recommendations for the reduction/review of RLNG sale price components and add-ons. Sub-committee 4 headed by the Chairman OGRA, tasked with reviewing components of revenue requirements, particularly the return-on-asset formula for the Sui companies. The progress reported by the conveners of the sub-committees provided is as follows : Sub-Committee-1: LNG Demand Synchronization: Secretary Power noted that based on the discussions held in the third review meeting, options of comparing energy purchase price of imported coal versus RLNG have been prepared. He stated that 50 percent generation from imported coal-based plants is a must off-take, however, less generation is being taken from these plants. He further stated that RLNG based power plants cannot be declared as 'must-run' power plants as the same will have implications on overall power generation basket. He emphasized that a technical level coordination committee needs to be constituted between Power and Petroleum Division to address the issues of RLNG demand and off-take. Naveed Qaiser, a representative of Power Planning & Monitoring Company (PPMC) which has squeezed the roles of PPIB and CPPA-G presented the numbers of imported coal versus RLNG energy purchase price as was asked by the Committee in its 3rd meeting. He said that at current RLNG price power sector is consuming upto 340 mmcfd of RLNG which can have additional consumption of upto 174 mmcfd at RLNG tariff of Rs. 1,500/mmbtu and 127 mmcfd at RLNG tariff of Rs. 2,000/mmbtu respectively. He however, highlighted financial implications on power generation basket in both incremental RLNG usage options of Rs. 88 billion and Rs. 41 billion per annum. Lt-General Zafar Iqbal pointed out that Task Force team has worked out that RLNG at WACOG of Rs. 2,200/mmbtu will manifold increase its consumption in power sector. He emphasized that there is on-going study on conversion of imported coal power plants to local coal and consumption of additional RLNG would, at indicated tariff, be beneficial for both Petroleum and Power sectors. He further explained that country's average demand of power during winters is 12,500 MW whereas same is 25,500 MW in summer when all plants are up and running. He stressed that Power Division may review the numbers of the comparative tariff with imported coal where RLNG intake can increase i.e., replacing the imported coal-based generation. Advisor to PM on Privatisation, Muhammad Ali also emphasized reworking of fuel cost numbers of imported coal versus RLNG in respect of increased consumption of RLNG in power so that demand numbers for LNG cargoes could be firmed. He proposed 24 cargoes be taken into NPD for CY26; Secretary Petroleum proposed extension of contract beyond 2031 was better than NPD route to address the issue of surplus cargoes. =The Committee decided that Secretary Power and Secretary Petroleum will work towards institutionalizing a coordination mechanism on short-term and it would be shared in the next meeting for concurrence of the Committee. The demand goes upto 12,500 MW in winters, in summers when the production goes up to 25,500 MW, all thermal plants are operating. If power substitutes the imported coal, at the RLNG rate of Rs. 2,000/mmbtu price, the Power Division maintained that it could lift 127 mmcfd more and that this analysis may be conducted by Task Force and Power Division on price and additional lift-off. The chair decided that sub-committee-1 firms up its recommendations with task force and submit its final report. Sub-Committee-2: Circular Debt Mitigation: Advisor to PM Privatisation, Muhammad Ali informed that a meeting with KPMG, Task Force team and Petroleum Division has already been held wherein detailed data has been exchanged. He stated that Task Force team is closely working with KPMG to develop options on gas CDMP and same will be presented next week. On the request of Advisor, Asad Hussain of Task Force presented concept paper and basic premise for CDMP work. He highlighted that five cash inflow options for settlement of stock of gas CD which included: (i) savings from LNG cargoes diversion (ii) imposition of PL of Rs. 5/liter (iii) use of incremental dividends of SOEs (E&P companies) (iv) RLNG receivables from power sector and (v) 100 percent waiver of LPS/interest payable to gas producers. He highlighted that Task Force is closely working with KPMG to finalize the gas CDMP. Lt-General Zafar Iqbal observed that 24 surplus cargoes per annum should be taken for contract extension beyond year 2031 third-party sale/ Net Proceed Differential. Secretary Petroleum Division suggested that if power demand increases at reduced RLNG tariff then number of cargoes should be reviewed and confirmed before visit to Qatar. He also proposed IMF sensitivities, Reko Diq commitments and foreign listing (GDR requirement be kept in mind). Lt-General Zafar Iqbal suggested that all cash inflows/revenues especially PL should be ring-fenced for settlement of gas CD. Minister for Petroleum Division also supported the same, citing N-52 formula, however, he observed that utilisation of collections of levy previously granted to Power Division as allowed by Finance Division should be extended to Petroleum Division for settlement of circular debt (as tariff reduction delinked). Representative from KPMG highlighted that auditors of SOE's may also be taken on board with specific reference to IAS-39. On the apprehension of committee at projected cash flows of SOEs and dividends without hurting their future investments in important projects like Reko Diq, Advisor to PM suggested that KPMG and Asad Hussain develop the working in the CDMP. Minister for Petroleum Division recommended that Additional Secretary (Policy) and Asad Naqvi, KPMG and CEOs of the companies discuss the proposed scheme to be discussed in the next meeting. He emphasized that CEOs/CFOs of the SOEs must satisfy the committee on the above stated matters. Sub-Committee-3: LNG Tariff Rationalization : Secretary Petroleum Division highlighted that sub-committee is working on RLNG cost components which include the PQA charges and a meeting in this regard is scheduled with PQA. He stated that numbers are being firmed up and would be presented in next meeting of the committee. He highlighted that with respect to scope of the sub-committee regarding LNG demand increase, a case has been moved for relaxation of moratorium in respect of pending and new individual gas connection applications. Minister for Petroleum Division observed that since option of a reduction of LNG cargoes is on the cards, therefore, optimum utilization of terminals needs to be worked out for cost reduction. It was noted that the option of shelving of 2 LNG cargoes per month working done so far takes into account the optimal combination for terminal capacity utilization which comprises of regasification of 3 LNG cargoes at terminal-1 and 4 LNG cargoes at terminal -2. Minister for Petroleum advised that sub-committee holds meeting(s) and finalizes its recommendations early next week. Sub-Committee-4: Domestic Gas Tariff Efficiency and Transparency: Chairman OGRA, being lead of this sub-committee made a presentation on the work done by the committee so far. He highlighted that for the review of the key component of the revenue requirement i.e, Return on Asset (RoA), OGRA has issued Letter of Intent (LoI) to selected consultant who will submit study/report within 90 days. He stated although the cost of gas alone is 89% of the total revenue requirements and there is little room for squeezing the cost components, however, OGRA is objectively reviewing the other components like fixed/ variable costs, T&D costs especially HR benchmarking. He informed that Sui Companies demonstrated improvement in their UFG against OGRA approved benchmark. He informed that as per the UFG study done in year 2018 through KPMG, UFG benchmark of 7.6 percent was fixed for a period of 5 years which comprises of 5 percent technical allowance and 2.6 percent based on meeting 30 Key Monitoring Indicators. He stated that digitization of gas flow stations like Sale Meter Station, Town Border Station and Consumer Meter Station is giving real-time information to companies and helping isolate the loss-making areas. Minister for Petroleum Division observed that in-line with licence condition of the Sui companies, the UFG targets need to be reviewed periodically. He also enquired after the UFG study done in 2018 which was valid until 2023, on how OGRA is benchmarking UFG targets thereafter. OGRA Chairman responded that earlier OGRA used to apply benchmark on both T&D UFG, however, now that practice was discontinued in FY23 and UFG targets are set separately for transmission and distributions segments. It was noted that OGRA is considering to do a new study on UFG benchmarking which would take 6-8 months' time. Minister for Petroleum Division advised that new UFG study be completed by OGRA by November 30, 2025. He also stressed upon the need that sub-committee should make recommendations at review of revenue requirements on quantitative basis (instead of qualitative basis) keeping materiality of report before the next meeting of the committee. Insiders claim that the Power sector Task Force has done extensive work on the issue of excess gas in the country and how to resolve RLNG supply issue. The officials also confirmed that senior members of the Task Force made a detailed presentation to the Prime Minister and senior government ministers and officials on roadmap for RLNG cargoes and ways to reduce gas prices for industry and power sector. Sources say this was aimed at improving energy security by increasing use of domestic gas and increasing exports through reduction of gas price for industry and power. Among various measures proposed, the RLNG ring-fencing mechanism was suggested to be done away with and having one blended gas price for industry and power. The final report will be submitted to the Prime Minister's Office as per Notification of the Committee. It was advised that meeting of the main committee may be held at on August 18, 2025 (today) at Head Quarters of Task on Power, Rawalpindi. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
Circular debt: Govt moves to cut LNG import, reform gas sector
ISLAMABAD: The government is fine-tuning reforms in the gas sector, including the reduction of two LNG cargoes per month, along with other measures aimed at bringing the circular debt flow of the sector to zero, well-informed sources in Petroleum Division told Business Recorder. Currently, the gas sector's circular debt stands at around Rs 2.6 trillion, mainly due to lower RLNG consumption by the power sector. The International Monetary Fund (IMF) has directed the government to eliminate the gas sector's circular debt flow. The fourth meeting of the committee was held on August 8, 2025, under the chairmanship of the Minister for Petroleum at the Task Force Headquarters, Army Air Defence HQ, Westridge, Rawalpindi. The meeting was attended by Advisor to the Prime Minister on Privatization, Lt-General Zafar Iqbal, Secretary Petroleum, and representatives of OGRA. IMF delineates steps to address gas circular debt The Petroleum Minister briefed participants on his recent meeting with the Prime Minister, during which the Task Force on Power presented issues arising from reduced LNG off take by the power sector. He emphasized the need for a clear strategy ahead of the planned visit to Qatar. The Minister also updated the forum on the progress made in the previous three committee meetings, where the work of four sub-committees was reviewed: Sub-committee 1–led by the Secretary Power, tasked with making recommendations on LNG demand synchronisation for power plants. This includes improved forecasting and coordination, as well as addressing queries raised earlier regarding Energy Purchase Price (EPP) comparisons between imported coal and RLNG. Sub-committee -2 –progress on the Gas Circular Debt Management Plan (CDMP), to be presented by the Advisor to PM on Privatization. Sub-committee 3 led by the Secretary Petroleum Division, focusing on recommendations for the reduction/review of RLNG sale price components and add-ons. Sub-committee 4 headed by the Chairman OGRA, tasked with reviewing components of revenue requirements, particularly the return-on-asset formula for the Sui companies. The progress reported by the conveners of the sub-committees provided is as follows : Sub-Committee-1: LNG Demand Synchronization: Secretary Power noted that based on the discussions held in the third review meeting, options of comparing energy purchase price of imported coal versus RLNG have been prepared. He stated that 50 percent generation from imported coal-based plants is a must off-take, however, less generation is being taken from these plants. He further stated that RLNG based power plants cannot be declared as 'must-run' power plants as the same will have implications on overall power generation basket. He emphasized that a technical level coordination committee needs to be constituted between Power and Petroleum Division to address the issues of RLNG demand and off-take. Naveed Qaiser, a representative of Power Planning & Monitoring Company (PPMC) which has squeezed the roles of PPIB and CPPA-G presented the numbers of imported coal versus RLNG energy purchase price as was asked by the Committee in its 3rd meeting. He said that at current RLNG price power sector is consuming upto 340 mmcfd of RLNG which can have additional consumption of upto 174 mmcfd at RLNG tariff of Rs. 1,500/mmbtu and 127 mmcfd at RLNG tariff of Rs. 2,000/mmbtu respectively. He however, highlighted financial implications on power generation basket in both incremental RLNG usage options of Rs. 88 billion and Rs. 41 billion per annum. Lt-General Zafar Iqbal pointed out that Task Force team has worked out that RLNG at WACOG of Rs. 2,200/mmbtu will manifold increase its consumption in power sector. He emphasized that there is on-going study on conversion of imported coal power plants to local coal and consumption of additional RLNG would, at indicated tariff, be beneficial for both Petroleum and Power sectors. He further explained that country's average demand of power during winters is 12,500 MW whereas same is 25,500 MW in summer when all plants are up and running. He stressed that Power Division may review the numbers of the comparative tariff with imported coal where RLNG intake can increase i.e., replacing the imported coal-based generation. Advisor to PM on Privatisation, Muhammad Ali also emphasized reworking of fuel cost numbers of imported coal versus RLNG in respect of increased consumption of RLNG in power so that demand numbers for LNG cargoes could be firmed. He proposed 24 cargoes be taken into NPD for CY26; Secretary Petroleum proposed extension of contract beyond 2031 was better than NPD route to address the issue of surplus cargoes. =The Committee decided that Secretary Power and Secretary Petroleum will work towards institutionalizing a coordination mechanism on short-term and it would be shared in the next meeting for concurrence of the Committee. The demand goes upto 12,500 MW in winters, in summers when the production goes up to 25,500 MW, all thermal plants are operating. If power substitutes the imported coal, at the RLNG rate of Rs. 2,000/mmbtu price, the Power Division maintained that it could lift 127 mmcfd more and that this analysis may be conducted by Task Force and Power Division on price and additional lift-off. The chair decided that sub-committee-1 firms up its recommendations with task force and submit its final report. Sub-Committee-2: Circular Debt Mitigation: Advisor to PM Privatisation, Muhammad Ali informed that a meeting with KPMG, Task Force team and Petroleum Division has already been held wherein detailed data has been exchanged. He stated that Task Force team is closely working with KPMG to develop options on gas CDMP and same will be presented next week. On the request of Advisor, Asad Hussain of Task Force presented concept paper and basic premise for CDMP work. He highlighted that five cash inflow options for settlement of stock of gas CD which included: (i) savings from LNG cargoes diversion (ii) imposition of PL of Rs. 5/liter (iii) use of incremental dividends of SOEs (E&P companies) (iv) RLNG receivables from power sector and (v) 100 percent waiver of LPS/interest payable to gas producers. He highlighted that Task Force is closely working with KPMG to finalize the gas CDMP. Lt-General Zafar Iqbal observed that 24 surplus cargoes per annum should be taken for contract extension beyond year 2031 third-party sale/ Net Proceed Differential. Secretary Petroleum Division suggested that if power demand increases at reduced RLNG tariff then number of cargoes should be reviewed and confirmed before visit to Qatar. He also proposed IMF sensitivities, Reko Diq commitments and foreign listing (GDR requirement be kept in mind). Lt-General Zafar Iqbal suggested that all cash inflows/revenues especially PL should be ring-fenced for settlement of gas CD. Minister for Petroleum Division also supported the same, citing N-52 formula, however, he observed that utilisation of collections of levy previously granted to Power Division as allowed by Finance Division should be extended to Petroleum Division for settlement of circular debt (as tariff reduction delinked). Representative from KPMG highlighted that auditors of SOE's may also be taken on board with specific reference to IAS-39. On the apprehension of committee at projected cash flows of SOEs and dividends without hurting their future investments in important projects like Reko Diq, Advisor to PM suggested that KPMG and Asad Hussain develop the working in the CDMP. Minister for Petroleum Division recommended that Additional Secretary (Policy) and Asad Naqvi, KPMG and CEOs of the companies discuss the proposed scheme to be discussed in the next meeting. He emphasized that CEOs/CFOs of the SOEs must satisfy the committee on the above stated matters. Sub-Committee-3: LNG Tariff Rationalization : Secretary Petroleum Division highlighted that sub-committee is working on RLNG cost components which include the PQA charges and a meeting in this regard is scheduled with PQA. He stated that numbers are being firmed up and would be presented in next meeting of the committee. He highlighted that with respect to scope of the sub-committee regarding LNG demand increase, a case has been moved for relaxation of moratorium in respect of pending and new individual gas connection applications. Minister for Petroleum Division observed that since option of a reduction of LNG cargoes is on the cards, therefore, optimum utilization of terminals needs to be worked out for cost reduction. It was noted that the option of shelving of 2 LNG cargoes per month working done so far takes into account the optimal combination for terminal capacity utilization which comprises of regasification of 3 LNG cargoes at terminal-1 and 4 LNG cargoes at terminal -2. Minister for Petroleum advised that sub-committee holds meeting(s) and finalizes its recommendations early next week. Sub-Committee-4: Domestic Gas Tariff Efficiency and Transparency: Chairman OGRA, being lead of this sub-committee made a presentation on the work done by the committee so far. He highlighted that for the review of the key component of the revenue requirement i.e, Return on Asset (RoA), OGRA has issued Letter of Intent (LoI) to selected consultant who will submit study/report within 90 days. He stated although the cost of gas alone is 89% of the total revenue requirements and there is little room for squeezing the cost components, however, OGRA is objectively reviewing the other components like fixed/ variable costs, T&D costs especially HR benchmarking. He informed that Sui Companies demonstrated improvement in their UFG against OGRA approved benchmark. He informed that as per the UFG study done in year 2018 through KPMG, UFG benchmark of 7.6 percent was fixed for a period of 5 years which comprises of 5 percent technical allowance and 2.6 percent based on meeting 30 Key Monitoring Indicators. He stated that digitization of gas flow stations like Sale Meter Station, Town Border Station and Consumer Meter Station is giving real-time information to companies and helping isolate the loss-making areas. Minister for Petroleum Division observed that in-line with licence condition of the Sui companies, the UFG targets need to be reviewed periodically. He also enquired after the UFG study done in 2018 which was valid until 2023, on how OGRA is benchmarking UFG targets thereafter. OGRA Chairman responded that earlier OGRA used to apply benchmark on both T&D UFG, however, now that practice was discontinued in FY23 and UFG targets are set separately for transmission and distributions segments. It was noted that OGRA is considering to do a new study on UFG benchmarking which would take 6-8 months' time. Minister for Petroleum Division advised that new UFG study be completed by OGRA by November 30, 2025. He also stressed upon the need that sub-committee should make recommendations at review of revenue requirements on quantitative basis (instead of qualitative basis) keeping materiality of report before the next meeting of the committee. Insiders claim that the Power sector Task Force has done extensive work on the issue of excess gas in the country and how to resolve RLNG supply issue. The officials also confirmed that senior members of the Task Force made a detailed presentation to the Prime Minister and senior government ministers and officials on roadmap for RLNG cargoes and ways to reduce gas prices for industry and power sector. Sources say this was aimed at improving energy security by increasing use of domestic gas and increasing exports through reduction of gas price for industry and power. Among various measures proposed, the RLNG ring-fencing mechanism was suggested to be done away with and having one blended gas price for industry and power. The final report will be submitted to the Prime Minister's Office as per Notification of the Committee. It was advised that meeting of the main committee may be held at on August 18, 2025 (today) at Head Quarters of Task on Power, Rawalpindi. Copyright Business Recorder, 2025
Business Recorder
2 days ago
- Business Recorder
DPL regulations: Misapplication could lead to industrial closures: PCDMA
KARACHI: The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has issued a strong warning over a crisis that threatens to halt Pakistan's industrial supply chain, cautioning that misapplication of Dangerous Petroleum License (DPL) regulations could lead to widespread industrial closures. In a formal letter to Ali Pervaiz Malik, Minister for Energy (Petroleum Division), PCDMA Chairman Salim Valimuhammad raised alarm over the Department of Explosives' enforcement of DPL requirements on non-petroleum chemicals—materials that do not contain hydrocarbons and therefore, fall outside the scope of the Petroleum Act. According to the letter, this Act was originally created to regulate petrol pumps and petroleum products, but unfortunately the Department is now placing industrial raw materials under its scope, despite the fact that these chemicals are solely consumed by industries as raw materials for manufacturing in textiles, plastics, leather, pharmaceuticals, fertilizers, cosmetics, and many other sectors. This misinterpretation has already brought chemical imports to a near standstill. Indenters have stopped issuing orders to protect their overseas suppliers, while PCDMA members have suspended imports due to fears that shipments will be refused customs clearance after the current exemption expires on August 24, 2025. With no goods currently in the import pipeline, industrial buyers are facing acute shortages of essential raw materials. 'If this issue is not resolved urgently, Pakistan could face a complete shutdown of industrial activity, particularly in industries that rely on continuous chemical supplies,' warned Valimuhammad. He also stressed that most of these chemicals are critical for export-oriented industries. Disruptions could trigger production delays, export order cancellations, and a sharp decline in foreign exchange earnings. Copyright Business Recorder, 2025
