Govt told not to sell imported gas to residential consumers

Published October 13, 2021
A file photo of a LNG cargo ship. — Dawn/file
A file photo of a LNG cargo ship. — Dawn/file

ISLAMABAD: With liquefied natural gas (LNG) based circular debt reaching Rs200 billion and global prices touching new peaks, a parliamentary panel on Tuesday asked the government to avoid selling expensive imported gas to residential consumers when they do not have the capacity to pay and instead dedicate imports to productive sectors.

The advice from the Senate Standing Committee on Petroleum came when Petroleum Secretary Dr Arshad Mahmood said the LNG related circular debt had amounted to Rs104bn over the last three years due to diversion of LNG to residential consumers in winters. He said if the practice continued, this year would add another Rs90bn to the debt. This is because local gas is priced at about $4 per MMBTU compared to over $12-13 per MMBTU of imported gas.

Winter gas loadshedding plan being prepared; senators resent loadshedding in provinces with surplus gas production

Senator Mohammad Abdul Qadir, who presided over the meeting, said common sense suggested that LNG should be used in productive sectors and residential consumers be provided only local gas. Other committee members also believed there was no reason LNG should go where its cost recovery was not possible.

Saving grace called PSO

This coincided with a notification issued by the Oil and Gas Regulatory Authority that put sale price of regasified-LNG (RLNG) in October for Sui Northern Gas Pipelines Limited (SNGPL) at $15.783 per MMBTU, about 113 per cent higher than same month of last year and about 3pc higher than last month.

The notification showed that major increase was because of expensive spot cargoes of Pakistan LNG Limited (PLL), putting its average delivered ex-ship price about 19pc higher than September 2021 and over 205pc higher than October 2020. This was despite the fact that PLL’s portfolio of six cargos also included two cargoes of $8.5-$8.7 per MMBTU. But then, PLL’s all other cargoes remained very expensive, including the highest priced $20.30 per MMBTU cargo. Its average price worked out at $15.5885 per MMBTU in October this year. On the other hand, Pakistan State Oil (PSO)’s came in as a saving grace because of long term contracts with Qatar, resulting in 13.5pc reduction in its average import price at $9.86 per MMBTU when compared to $11.4 per MMBTU of September 2021. However, PSO’s imports price for October 2021 is about 67pc higher than same month of last year.

While briefing the committee on gas shortages/crisis in the country during last two years and steps taken to overcome the same, the petroleum secretary said both Sui companies were making all-out effort to maintain uninterrupted gas supply to all the sectors, including domestic and industrial sectors, on 24/7 basis but now was the challenge because domestic gas demand increased in winter months over three times on SNGPL network and two times on Sui Southern Gas Company network due to use of water and room heaters and there remained a shortfall even after maximum orders of RLNG by SNGPL.

Gas load management plan in the offing It was explained that 2018-19 and 2019-20 remained stable but during winter load management of 2020-21 SNGPL faced delays in arrival of vessels and late berthing of cargos, resulting in demand-supply gap during the second half of December 2020. In order to mitigate the shortfall, SNGPL resorted to closure of CNG stations of Punjab and Khyber Pakhtunkhwa and captive power plants (non-zero rated) of Punjab along with curtailment of RLNG supplies to power sector.

The meeting was informed that winter gas load management plan was being prepared and would be presented to the federal cabinet for approval and all out efforts would be made to ensure maximum supply of gas to different sectors. Senator Shamin Afridi expressed his reservations regarding gas loadshedding in KP. He questioned as to why there was loadshedding in KP when the province had surplus gas production. Senator Fida Mohammad also weighed in on the situation and lamented the role of SNGPL in distribution of gas supplies between the provinces.

Senator Quratul Ain Marri and Senator Rukhsana Zuberi pointed out that Sindh also had surplus gas production and yet the province faced gas outages in violation of the constitution. The senators termed gas loadshedding in Balochistan, Sindh and KP violation of Article 158 of the Constitution which required that local gas producing areas got precedence over other parts of the country in terms of distribution of gas. SNGPL officials present during the meeting, however, denied that there was any gas loadshedding in KP at present.

The ministry officials explained that as routine electricity demand decreased while gas demand increased during winters in Pakistan, a policy had been drafted which would allow domestic users to utilise electricity during the winters for heating purposes at fixed rates.

Senator Zuberi said an awareness campaign should be launched on conservation of energy and people should be apprised of the impending energy crisis.

The members expressed their reservations on the constant absence of Minister for Energy Hammad Azhar from the committee meetings and staged a walkout in protest against his absence. They returned when assured by the committee chairman that a letter would be written to the prime minister to ensure that the minister attended the panel meetings in future.

Published in Dawn, October 13th, 2021

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