KARACHI: Sui Southern Gas Company Ltd Chairperson Dr Shamshad Akhtar said on Friday the loss in terms of unaccounted-for gas (UFG) is equal to the cost of LNG imports estimated at $2 billion a year.

Speaking at the Pakistan Energy Symposium held by Engro Energy, the former governor of the central bank blamed “everybody” for being involved in the theft of gas estimated to be 1.2bn cubic feet per day, which is equal to the quantity of re-gasified imported LNG that’s been injected into the gas pipeline network.

“Look at the trade-off. You solve the problem, you don’t need to have import dependence,” she said.

Warning about a full-blown circular debt within the gas sector, she said the government must ensure “full recovery” against the supplied gas. Between 12 per cent and 18pc of total gas supplies go unaccounted for. The UFG rate for Balochistan is as high as 48pc, she said. “We’ve given solutions, but nobody wants to look at them. It’s politically difficult.”

Dr Akhtar called for deregulating the energy market to strike a balance between availability, accessibility, affordability and sustainability. Praising the National Electric Regulatory Authority (Nepra) for the Competitive Trading Bilateral Contracts Market (CTBCM) set to launch on May 1, she said “economic businesses” must not be cross-subsidised in the name of “social obligations”.

Under the proposed CTBCM, Nepra is going to develop a wholesale competitive marketplace that’ll allow bulk users or traders to buy and sell electricity units on an exchange-like platform at a mutually agreed tariff. In other words, the power sector will make a transition from a multi-seller/single-buyer model to a multi-seller/multi-buyer model. She said the country would’ve switched to the new model years ago had it not been for governments that “keep on changing”.

“Our accumulated debt stock in the power sector is $13.2bn or close to 6pc of GDP. We’re providing almost 80pc of federal subsidies to this sector. How inefficient is it?” she said.

Calling for doing away with separate regulators for power and gas sectors, Dr Akhtar said the regulator must have an “integrated view” of the energy sector to identify the least-cost option for power generation.

She heavily criticised the use of merit order, which ranks the available sources of electricity generation mainly on the basis of the fuel price.

“It’s a totally cross-subsidised approach. The allocation of gas, the price we pay for buying the gas, the price we sell it for, it’s all decided by the government. So why set up a company? It is my big question… No company can function in a viable manner the way this has been going on,” she said.

Predicting that LNG prices will remain high over the next two years in view of the ongoing Russian-Ukraine war, she urged the government to ensure their imported gas cargoes aren’t diverted to other markets. “Otherwise, the circular debt (in the gas sector) will magnify and compete with that in the power sector.”

Published in Dawn, April 2nd, 2022

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