ISLAMABAD - Today’s Economic Coordination Committee (ECC) is likely to approve award of $1.2 billion LNG services contract with Engro Vopak Terminal Limited (EVTL) to ensure first flow of LNG in November this year and deregulation of margin of Oil Marketing Companies (OMCs) and petroleum dealers on high-speed diesel and petrol.

Well-informed sources aware of the development informed The Nation on Wednesday that ministry of petroleum and natural resources has dispatched a summary to the ECC and recommended to permit Sui Southern Gas Company Limited (SSGCL) to sign LNG services agreement with EVTL for building LNG handling facility at Engro’s existing terminal at Port Qasim-Karachi with tolling charges. They also told that the SSGCL would pay 0.66cents/mmbtu to EVTL on account of terminal charges, as terminal would be used for re-gasification and storage purposes. The said agreement also includes certain conditions and the Engro would be responsible for putting its 400mmcfd capacity terminal operational within 11 months after the signing of the agreement, they added.

Earlier, the board of SSGC on January 28 achieved a major milestone towards bringing imported Liquefied Natural Gas (LNG) to the country by approving a plan for construction of new terminal for import of Liquefied Natural Gas (LNG) at Port Qasim to a subsidiary of Engro Corporation with certain conditions.

According to two major conditions of the agreement, the SSGCL would not pay any charges under the head capacity in case of no import of gas to the country. Secondly, SSGCL would not pay the price of gas likely to be wasted on account of technical losses.

The sources also informed that petroleum ministry would also seek ECC approval for introducing a new mechanism of reviewing the prices of petroleum products (POL) in the country, viewing the miseries of inflation hit masses bearing the brunt of skyrocketing hike in POL prices for as long time. Similarly, ECC would once again take up summary of Petroleum and Natural Resources Ministry, seeking deregulation of margin of Oil Marketing Companies (OMCs) and petroleum dealers on high-speed diesel and petrol.

Earlier, ECC in its meeting held on Feb 02, 2013 had directed petroleum ministry to conduct a study for establishing mechanism for revision of oil marketing companies and petroleum dealer’s margin. After completing process, the study was awarded to Pakistan Institute of Development Economics (PIDE).

Quoting PIDE report, the officials further disclosed that the PIDE has recommended fixing OMCs margin on petrol at Rs0.63 per litre and Rs0.82 per liter on high-speed diesel while dealers’ margin on petrol should be at Rs0.64 per liter and Rs0.81 per litre on high-speed diesel.

When contacted with energy experts, they said if the ECC gives its approval to the proposed deregulation of margin on petrol then the companies and dealers would be free to collect additional price at their will and petrol consumers would bear the brunt. They also said that per liter price of petrol would be different on different filling stations even within a city of the country. Similarly, the mechanism of uniform prices of POL across the country would met an end with effect to this decision pertain to deregulating the margin of companies and dealers.

Under the current mechanism, government in its bid to save the consumer’s skin from additional price has fixed the OMCs margin on petrol at Rs1.98/liter and the dealer’s margin at Rs2.37/liter.

They also said that concerned OMCs and dealers would collect the margin over the sale of per liter of petrol on the basis of competition and their presence in the area according to proposed deregulation of margin of OMCs and petroleum dealers.

“If demand of oil of an oil marketing company or dealer goes up then there would be more profit for that company or dealer while in case of low demand, collection of margin from the consumers would be less so that consumers should buy petrol from its filling,” an expert said. He also said that the OMCs and dealers under the proposed deregulated margin would be able to change the volume of profit at their sweet will.