Gas supply shortage

Published June 30, 2021

THE shutdown of a gas field in Sindh for annual maintenance and the unplanned dry-docking of Engro’s RLNG terminal has forced the country’s two gas utilities — SSGC and SNGPL — to cut fuel supplies to most industrial units, including cement factories and fertiliser plants, as well as to captive power plants and the CNG sector. The supplies have been discontinued in Sindh, Punjab and KP for one week to July 5. SSGC had already been rationing supplies to the transport sector and captive power plants for a few days to cover the shortfall arising from the previous shutdown of gas fields. Now it has extended the rationing period as the country’s overall gas deficit expands with the RLNG terminal maintenance which has forced SNGPL to resort to gas curtailment in its jurisdiction. The system gas thus ‘saved’ is expected to be diverted to RLNG-based power generators for producing cheaper electricity and keep blackouts resulting from suspension in RLNG supplies to a minimum. The RLNG supplies are likely to be restored, albeit only partially, after the replacement of Engro’s Floating Storage and Regasification Unit. Full restoration of supplies from the terminal are not likely before seven to 10 days.

The Federation of Pakistan Chambers of Commerce & Industry has rightly argued that the gas shortages would impose huge costs on businesses, affecting production and exports, and common people will be forced to bear the higher generation cost in their monthly power bills. The FPCCI has also pointed out that the entire country is now in the grip of an energy emergency because of Engro’s selection of peak summer for undergoing ship replacement for the terminal’s dry-docking in order to cut down its own expenditure. The gas demand in the country is increasing and the fuel’s domestic production contracting, creating supply gaps and shortages that have to be met through LNG imports. The current market share of LNG is around 25pc of the total gas sales. The imports are likely to increase substantially as the demand grows and domestic output drops further. We are already experiencing massive gas cuts in winters since we do not have enough terminal capacity to import more LNG to meet our needs. If the government has plans to get rid of these periodic gas shortages, it should realise that the country direly needs new private terminals for ending public-sector monopoly in the market and encouraging business-to-business deals, expansion in pipeline capacity and creation of storage.

Published in Dawn, June 30th, 2021

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