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PM orders inquiry as gas crisis bites

Updated December 13, 2018

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The committee tasked with conducting an inquiry into the matter is required to submit a report to the prime minister within 72 hours. ─ File photo
The committee tasked with conducting an inquiry into the matter is required to submit a report to the prime minister within 72 hours. ─ File photo

ISLAMABAD: A crisis in the gas sector proliferated across the country on Wednesday as gas shortages forced industry closures across Punjab and Karachi, and even domestic consumers in many parts faced outages. Later at night, Prime Minister Imran Khan took personal notice of the situation and summoned Petroleum Minister Ghulam Sarwar, who blamed the management of two gas companies — SSGC and SNGPL — following which the premier ordered an inquiry into “specific allegations against the managing directors”.

The prime minister was informed by the petroleum minister that drop in gas production in the south fields of Kunnar Pasakhi and Gambat caused problems in Karachi, and faults in gas compressors at Nawabshah and Saran created shortages in the north.

“SNGPL did not report gas demand and supply shortfall in December accurately to the government, and SSGCL failed to inform the government about faults in the compressors in a timely manner,” a statement issued by the PM Office said.

The inquiry is to be conducted by a committee headed by Oil and Gas Regulatory Authority (Ogra) chairperson Uzma Adil Khan. Additionally, three directors general of the petroleum division Qazi Saleem, Shahid Yousaf and Imran Ahmad will call any expert witness to assist in the proceedings.

Widespread industry shutdowns prompt outcry

“The specific allegations against the managing directors of SNGPL and SSGCL include negligence in reporting of facts to the ministry or incompetence to deal with operational issues, withholding of information from the government and overall systematic governance failure of SNGPL and SSGCL,” according to a notification issued by the petroleum division.

The committee is required to submit a report to the prime minister within 72 hours.

Industries in Lahore had their gas cut off late on Tuesday night and were told it would be back in 24 hours. Likewise, industries in Faisalabad had been cut off by 10pm on Tuesday and were also told to expect restoration of supply in 24 hours. But late on Wednesday night, as restoration time drew near, industry leaders in both cities told Dawn that they were told to wait another six to eight hours before full resumption of supply.

Karachi industrialists reacted strongly to the notices that were served on them the day before, alerting them of imminent disconnection. Several groups met separately to chart an appropriate response, eventually reaching out to the established trade bodies like the Karachi Chamber of Commerce and Industry, the Federation of Pakistan Chambers of Commerce and Industry, SITE Association of Industry, the Bin Qasim Association of Trade and Industry and the Korangi Association of Trade and Industry. All groups issued separate statements during the day, calling for immediate resumption of supply and pointing to government’s mismanagement of the gas sector and growing losses in transmission as some of the factors behind the crisis.

By late Wednesday night, some industry leaders told Dawn that they had been reassured by the SSGC that the outage would not last beyond Friday.

In its letter sent to the industry across the city, the SSGC did not give any specific reasons for the shortfall, saying simply that they were facing “a continuous short supply of gas from different gas fields”.

Speaking to Dawn, an SSGC spokesperson said the Kunnar Pasakhi field had developed a fault and claimed that supply to the export-oriented industry and power generators was normal.

In a written statement sent to reporters, the petroleum division said the SSGC was getting 1200mmcfd (million cubic feet per day) indigenous gas these days, compared to 1280mmcfd in December last year. This shortfall of 80mmcfd was due to natural depletion of indigenous gas reserves. The total shortage on these two counts worked out at 130mmcfd when compared to last year.

“Another 100mmcfd additional gas is consumed by the domestic sector from December onwards, due to the onset of winter”, bringing the size of total shortfall to 230mmcfd, a source in the petroleum division told Dawn.

“To overcome the problem, and to ensure adequate supply to domestic and commercial sectors, gas to captive power plants of all general industries, excluding the zero-rated and rice export industries, will remain shut with immediate effect till further notice,” the SSGC letter to the industry stated.

Oil refineries have been reporting a crisis-like situation since last month owing to filling to capacity of their furnace oil storages and warning that they would be compelled to reduce production capacity.

The matter was repeatedly discussed by the cabinet committee on energy comprising almost all economic ministers. Informed sources said condensate from a series of hydrocarbon fields had been processed at site and transported to refineries. A couple of processing plants at the gas fields were out of order and refineries were least interested in lifting condensate because of their furnace oil storage constraints.

This was partially confirmed by the petroleum division. It said that “gas supplies from three fields namely Kunnar, Pasakhi and Gambat have been reduced by 50mmcfd, from November 22, 2018, as a consequence of curtailment due to condensate storage problem at the fields and refineries”.

Meanwhile, a ray of hope emerged from two LNG terminals in Karachi. Engro Elengy’s CEO told Dawn that his terminal would be up and running by Thursday morning after a routine maintenance shutdown.

And Pakistan Gas Port Ltd reported that it was operating at full capacity, pumping 650mmcfd of gas into the SSGC system. It was reported that eight RLNG shipments would be arriving in time according to the schedule while efforts have been expedited for the revival of domestic gas production.

The petroleum division said the SSGC had issued notices to industries with captive power in October 2018 that it would not be able to provide gas in December–February period to ensure supply to domestic consumers in view of the above gas shortfall of 230mmcfd. The captive power customers were told under their agreement to make alternate fuel arrangements.

The SSGC also started reducing gas supply to the power sector in the first phase and issued notices to captive power customers (other than zero-rated) to curtail consumption by 50 per cent. However, the captive power sector was reluctant to cooperate.

As a result, the SSGC was constrained to stop supply of gas to CNG stations from Dec 10 and captive power units of general industry were served notices on Dec 11 for complete closure, according to the source in the petroleum division.

The petroleum division said that although compressor units of the SSGC system were out of service due to technical reasons, moving RLNG upcountry to Sui Northern was not a problem and had no impact on the SSGC system. “As soon as gas supplies from the fields are reclaimed and the situation is stabilised, gas supplies from the system will be restored,” the petroleum division said.

In the National Assembly, PPP members Abdul Qadir Patel and Naveed Qamar criticised the government for violating Article 158 of the Constitution that promised first right of gas supply to the province where it was produced, but the CNG and industry in Sindh was suffering.

The petroleum minister said the gas companies had already sought interpretation of Article 158 from the Supreme Court.

Published in Dawn, December 13th, 2018

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