KARACHI, April 7: People are likely to suffer prolonged outages for nearly a month across the city from April 11 when the Sui Southern Gas Company will cut gas supply by about 100 MMCFD to the Karachi Electric Supply Company due to the 24-day closure of Bhit gas field for an annual turnaround.

Even the industries, which had been exempted from power loadshedding, were expected to experience prolonged outages, said KESC chief financial officer Tayab Tareen while briefing the media on the gas availability and its impact on tariff on Thursday.

He said the KESC had already been facing gradual reduction in gas supply over the past several months, causing a serious impact on the consumer-end tariff and affecting the overall operations of power plants some of which only operated on gas.

“Against an allocation of 276 MMCFD (million cubic feet per day), the KESC is currently receiving only 133 MMCFD.”

Mr Tareen maintained that every 25 MMCFD reduction in gas supply caused an increase of Rs0.88 per kWh in power tariff. “Gas availability has a significant impact on the tariff paid by consumers,” he said.

The curtailment of gas by 143 MMCFD had an impact of Rs5.03 per kWh on the consumer-end tariff, he said.

Mr Tareen said that reduced gas supply was leading to increased consumption of furnace oil, which was 3.7 times more expensive than gas. While the gas supplied by the SSGC increased by two per cent annually since the financial year 2006, the supply to the power sector decreased 6.3 per cent annually, he said. “Last year, 56 per cent more furnace oil was used for power generation costing Rs18.6 billion.”

He said that the higher cost of fuel for power generation would cause a sharp increase in financial burden on consumers in a situation when international monetary organisations such as the IMF had been seeking withdrawal of subsidy being provided by the government in the power sector.

The power utility demanded that the allocated quota of gas (i.e. 276 MMCFD) for the KESC should be provided to it, as this allocation had also been approved by the most relevant federal government forums, including the Economic Coordination Committee, and such an improved volume of gas would be much helpful for the KESC to meet the city's power demand.

Asked about the existence of the general sales agreement and the SSGC's contention on the issue, he said the power utility had been trying for the same but both sides had yet to resolve some differences.

He advocated a change in gas allocation policy and said that by doing so the government could save 1.7 billion dollars.

He also touched upon the issue of circular debt.