ISLAMABAD: To woo maximum voters in the coming elections, the PML-N government has ordered a record one million additional gas connections for domestic consumers on the recommendations of parliamentarians, mostly in gas-starved Punjab, as it enters its final 90 days in office.
The cost of pipelines spread over 20,000 kilometres is estimated at Rs14 billion and the Oil and Gas Regulatory Authority (Ogra) is under extreme pressure to “approve in principle” about 700,000 new connections within days, a senior Ogra official confirmed.
All this is being 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 Sui Northern Gas Pipelines (SNGPL) and its consumers, said a government official. He said that similar populist schemes were launched by the PPP government in 2012-13 and most of them could not be completed as the Supreme Court had blocked their implementation.
The official said the SNGPL had already issued Rs50bn worth of work orders this year for procurement of pipelines and related parts and equipment for the domestic gas schemes called distribution main and distribution lines. These include carryover unfinished schemes of previous years. He said the total cost of the approved gas schemes was currently estimated at about Rs1 trillion, but these were unlikely to be completed in a decade.
Petroleum Secretary Sultan Sikandar Raja did not respond to requests for comment on the additional gas connections and their sustainability.
The schemes are on top of major gas infrastructure pipelines worth around $2bn (Rs200bn) for transportation of imported liquefied natural gas (LNG) from Karachi to Punjab. The scheme is currently under implementation.
The Ogra official said the regulator had already approved 300,000 fresh gas connections at an estimated cost of Rs4.2bn as part of estimated revenue requirement for 2017-18. The regulator has already received another petition for Rs9.5bn to launch 700,000 more connections.
He said that besides normal government channels, the Ogra top brass had also been called to the Parliament House last week to push for quick approval. “We have promised to deliver within a week as one of the Ogra members returns from abroad,” the official added.
He said financing of the schemes would be made part of the revenue requirement and then passed on to consumers on the basis of actual spending.
Besides, the government has already diverted about Rs7.2bn through technical supplementary grants (TSG) out of the federal budget for 27 selective gas schemes between July last year and January this year for the National Assembly constituencies of Murree, Kohutta (Prime Minister Khaqan Abbasi’s areas), Kohat, Mardan, Norowal, Naushero Feroze, Mansehra and Nankana Sahib, Peshawar, Swat, Shangla, Sheikhupura, Lahore, Sialkot, Chakwal, Sahiwal, Chinyot and Abbottabad/Mansehra.
Officials said it was strange that Ogra and the SNGPL were obliging politically-motivated schemes having huge financial implications despite knowing well that the gas company did not have the capacity to deliver one million domestic connections with 20,000km pipelines in one year. They said the company could deliver more than 300,000 connections with 5,000-6,000km pipelines in a year.
The officials said that half of the funds spent during the elections normally went down the drain or were siphoned off, adding that 20,000km pipelines could not be laid in three months before the elections.
There is no domestic natural gas available in Punjab to feed new towns and consumers as gas supplies are already dwindling. The gas-producing provinces, particularly Khyber Pakhtunkhwa, are no longer allowing fresh gas finds to the national grid that could be delivered to Punjab unless full utilisation is made in their won areas.
This means imported LNG would be diverted to the gas distribution system for supply to domestic consumers for short-term political gains. This will be unaffordable for the consumers and play havoc with sustainability of not only the SNGPL but also the entire energy sector in view of about Rs1100 per unit cost of LNG, compared to Rs100 to poor domestic consumers.
Interestingly, Ogra in its recent annual report said that with an 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 would 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 Feb 10.
The regulator attributed this rise in demand and consumption of gas by residential and domestic consumers to price differential vis-à-vis other competing fuels — liquefied petroleum gas, firewood and coal.
Over the past five years, more than 300,000 consumers had been added to the gas network annually by gas companies. The growth in commercial and residential consumers, as well as in the fertiliser and power sector, resulted in a shortage, the report said. “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, February 26th, 2018