THE first-ever consignment of LNG arrived in the country to far less than the fanfare that one would have expected. There has been a rush to claim credit for the development, threats of a court challenge from one provincial government, confusion in the media about who really imported the consignment, and continuing mystery over the negotiations for a long-term supply contract from Qatar. Not only that, it appears that very little of the homework required to effectively manage the injection of the imported gas into the system has been done. It turns out that the government had decided to swap the molecules injected into the system at the port with those produced from fields in upper Sindh as a mechanism to transfer the gas to its consumers in Punjab. But the provincial government of Sindh is upset that it was not consulted when this mechanism was finalised, especially since it involves the diversion of its own gas. The private sector parties, which imported the first consignment, discover that there is no pricing mechanism in place to draw the gas out from their respective points of consumption upcountry. Additionally, they are being told that losses through Unaccounted for Gases (UFG) will be applied to their imported consignment, and there is much to debate about how these will be calculated.

In fact, the first consignment of LNG appears to have sparked a bit of a wrangle between the myriad stakeholders in the gas supply chain. In due course, pricing issues between the various publicsector entities will also surface. Most of the issues coming up are nothing more than glorified teething problems and should not be blown out of proportion. But it is still astonishing that all this work was not done prior to the arrival of the first consignment. The government had months in which to get these issues sorted out, and none of them constitutes rocket science. Now that the first consignment has landed, the confusion has created the space for frivolous controversy mongers to have a field day. The petroleum ministry must bear some of the responsibility for the growing chorus of confusion that is engulfing the project, because it was its job principally to ensure that the policy framework to absorb the imported gas into the national system was in place. Now the work has to be done in amateur haste, for which there will doubtless be a cost to pay.

Published in Dawn, March 29th, 2015

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