ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has allowed Sui Northern Gas Pipelines Ltd (SNGPL) to spend Rs20 billion to provide a record one million fresh connections within the remaining three months of this fiscal year.

In its determination, Ogra noted that it had already allowed about Rs4.22bn for 300,000 fresh connections and the SNGPL requested increase in the target for fresh connections to one million with an addition of 700,000 connections during the same year.

The regulator deplored that the company had originally demanded increasing the gas connection to clear huge backlog of 2.2m pending applications and to reduce the waiting period. It then changed its stance by saying the new connections shall be installed, provided Ogra also allowed change in bulk-to-retail ratio as part of system losses.

The additional connections were earlier ordered by the government to woo maximum voters in coming elections on the recommendations of parliamentarians, mostly in the gas starved Punjab province.

The cost of pipelines to spread over 20,000 kilometres is estimated at Rs15bn.

“All this is done in the name of ‘sustainable development’ even though the schemes are neither sustainable at this stage because of gas shortage, nor affordable for the SNGPL and its consumers,” a senior government official remarked.

He said similar populist schemes were launched by the PPP government during fiscal year 2012-13 and most of them could not be completed as the Supreme Court of Pakistan blocked their implementation.

He said the SNGPL had already issued Rs50bn worth of work orders during the current year for procurement of pipelines and related parts and equipment for domestic gas schemes called distribution main and distribution lines. These also include carryover unfinished schemes of previous years. He said the total cost of approved gas schemes currently was estimated at about Rs1 trillion but were unlikely to be completed in a decade.

In view of the political ramifications, Ogra said it was allowing the additional budget of Rs15 in principle against the “schemes approved by the Government of Pakistan Directives”. Thus it also put on record that the company to “install additional connections over and above the 300,000 connections in a fair, equitable and non-discriminatory manner keeping in view its capacity to undertake and complete the said jobs as well as availability of gas”.

Because of past court orders, Ogra also “directed” the company to strictly comply with the decision of the apex court relating to provision of new gas connections on turn-merit basis.

The government has already diverted about Rs7.2bn through technical supplementary grants (TSG) out of federal budget for 27 selective gas schemes between July and January this year for National Assembly constituencies of Murree, Kohutta (PM Abbasi’s areas), Kohat, Mardan, Narowal, Naushero Feroze, Mansehra and Nankana Sahib, Peshawar, Swat, Shangla, Sheikhupura, Lahore, Sialkot, Chakwal, Sahiwal, Chiniot, Abbotabad and Mansehra.

Officials said it was strange that the Ogra and SNGPL were obliging politically motivated schemes worth huge financial implications despite knowing well that the company did not have the capacity to deliver one million domestic connections with 20,000 km pipeline in one year. At maximum the company could deliver in a year could be no more than 5,000-6,000 kilometers of pipeline, officials added.

They went on to add that said half of the funds spent during elections normally go down the drain or are siphoned off as 20,000km pipelines could not be laid in three months before elections.

In fact, sources said, there is no domestic natural gas available in Punjab to feed these new towns and consumers as gas supplies were already dwindling. Gas producing provinces, particularly Khyber Pakhtunkhwa, were no longer allowing fresh gas finds to the national grid that could be delivered to Punjab unless full utilisation takes place in their respective areas.

Interestingly, the Ogra in its recent annual report said the average addition of 300,000 gas consumers every year, the country’s gas shortage would touch four billion cubic feet per day (bcfd) — almost equal to current total supplies — in two years and will go beyond 6.6bcfd by 2030.

“The shortfall in gas is expected to reach 3.999bcfd by the fiscal year 2019-20 and the gap will reach 6.611bcfd without imported gas by 2029-30,” Ogra said in its report released on February 10 this year.

The authority attributed this rise in demand and consumption of gas by residential and domestic consumers owing to price differential vis-à-vis other competing fuels — liquefied petroleum gas (LPG), firewood and coal.

Over the past five years, more than 300,000 consumers had been added to the gas network annually by gas companies and the growth in power, commercial and residential and fertiliser sectors resulted in a shortage, the report said, adding that “the demand for natural gas will further increase in the coming years…It is forecast that due to ever-increasing demand for gas, Pakistan will face a deficit in gas supply”.

Published in Dawn, March 22nd, 2018