ISLAMABAD: Natural gas will only be available to domestic consumers this winter and will not be supplied to other sectors due to a rising shortage in Punjab, Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi said on Monday.
Speaking at a press conference, the minister said that only 1150mmcfd (million cubic feet per day) of gas was available in the Sui Northern Gas Pipelines Limited (SNGPL) system, of which 350mmcfd was Khyber Pakhtunkhwa’s share. That would leave only 800mmcfd for Punjab, against its peak domestic demand of over 900 mmcfd.
After giving KP its share, the remaining gas “would stand consumed entirely in the domestic sector”, the minister said. He said that 2.9 billion cubic feet per day were available in the system at the time of the 18th Amendment in 2010, which had come down to 2.4bcfd because of the depletion of existing reservoirs.
As a consequence, SNGPL’s share had now dropped from 1,700mmcfd to 1,150mmcfd. On the other hand, gas production in Sui Southern Gas Company’s (SSGC) system had increased from 1200mmcfd to 1,250mmcfd.
The minister said that the business community had been told that a Rs50 per unit cut in natural gas tariffs would cost Rs6 billion. He said that the Sui companies were bearing the maximum burden in their own capacity and said that the government would have to provide a cushion if it wanted to subsidise the export industry.
Khaqan Abbasi says proposal to regulate LPG in the offing
He said his ministry had moved a summary to the Council of Common Interests (CCI) to fix the production and import prices of liquefied petroleum gas (LPG) as well as the margins for distributors and marketing companies. Once this was approved, LPG would become a regulated product again after its deregulation almost 15 years ago, which would enable local administrations to take action regarding price control.
He said that the new margins would be liberal and consultations had been completed with stakeholders, who had agreed to the plan. The decision was taken in light of past experience, where companies and distributors fleeced citizens who relied on this fuel and forced them to pay Rs2,200 for an 11kg domestic cylinder.
The petroleum ministry believes that the fair price for LPG at this point would not be more than Rs800-850 per 11kg domestic cylinder after its price is regulated, he said.
Responding to a question on shale gas production, the minister said this was not economically viable at a time when oil prices were this low. Shale gas would require a price of $12 per mmbtu (million British thermal units), while liquefied natural gas (LNG) was currently available at $7-8 per mmbtu.
Nevertheless, he said the government was still studying the subject and shale gas deposits were fortunately greater than originally estimated by the US Energy Information Agency (EIA).
Responding to a question, the minister said his ministry ordered the removal of SNGPL Managing Director Arif Hameed because he had not been able to deliver on targets. As the head of the company, Mr Hameed was required to look for sources of gas for the company’s consumers, which he failed to do, while gas losses — known as unaccounted for gas — also increased on his watch.
Mr Abbasi said that members of the SNGPL board of directors had vested interests and were only looking after their private businesses. One of the directors, he said without mentioning a name, had personally drawn at least Rs200 million as legal fees from the company.
Saying that he had taken up the need for changing corporate rules with the Securities and Exchange Commission of Pakistan, he maintained that he had not embarrassed the prime minister by issuing Mr Hameed’s termination orders. He said that the board of directors had not taken up his removal for approval because of a restraining order issued by the Lahore High Court.
Published in Dawn, September 15th, 2015