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Gas crisis

Updated December 15, 2018

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THE prime minister did the right thing by intervening directly when the gas crisis spread in the country earlier this week, crippling industry and disrupting traffic across Punjab and Sindh. But he could have waited till the crisis was over to launch an inquiry into allegations against the top management of the gas distribution companies.

That announcement did not need to be made at the very peak of the crisis because it fuelled a sense of panic amongst the staff of the gas companies precisely at a time when their energies needed to be focused on resolving the situation. Once supplies were restored and normalcy returned, there would have been ample time for initiating inquiries.

The petroleum minister set the standard for evading responsibility and scapegoating the companies that fall directly under his authority. He told the prime minister that the senior management of these companies provided him with incorrect information about the demand in winter and the operational status of some parts of the distribution grid.

Read more: SNGPL, SSGC held responsible for current gas crisis; PM orders inquiry against top management

Yet the inquiry committee consists of precisely those people who for years have been drawing up gas demand projections in winter.

It beggars belief how the government believes that such an inquiry committee will furnish the answers they seek, unless their response to the crisis is nothing more than finding heads to roll.

The government’s response to the crisis appears to be driven by panic and scapegoating and blaming instead of fixing the problem first.

Having now constituted the committee, the government should perhaps use this opportunity to look at the kinds of policy reforms that the gas sector is in urgent need of.

It should also take seriously the complaints from Sindh that the Constitution’s Article 158 — which gives priority access to gas to those provinces where it is being produced — is being violated.

Beyond that, pricing as well as governance reforms are badly required across the sector, especially as imported LNG is all set to play a bigger role.

Transmission and distribution losses are mounting, the public companies are riddled with maintenance issues, liquidity problems, financial mismanagement and much more. It is a matter of concern that they keep asking for the Unaccounted for Gases target to be raised, and that the gas pricing structure gives them a fixed return no matter what their performance.

Short, sharp crises of supply during the winter months are now becoming routine in the gas sector, and last year we saw a similar episode during which SSGC cut off supplies to K-Electric and tried to cite the absence of a gas purchase agreement as the reason.

Clearly, shortages are growing, and without pricing and governance reform, the deficits will continue to trigger more such episodes. This crisis, as well as the inquiry, provide, an excellent opportunity to launch an effort at comprehensive reform.

Published in Dawn, December 15th, 2018