Gas management

Published October 28, 2022

GAS shortages have been an integral part of everyday life in Pakistan for around two decades. In recent years, however, the shortages have worsened owing to depleting local gas reserves and a growing demand from residential consumers due to the fuel’s concessional pricing. Even gas imports from Qatar since 2015 have never helped fully bridge the supply gap during winters when the demand for residential heating surges. The coming winter season is expected to be the worst ever due to the inability of the government to purchase additional LNG cargoes from spot markets, owing to the fuel’s elevated rates because of the rising European demand after the suspension of supplies by Russia since the latter’s invasion of Ukraine. This is quite evident from the load management plan chalked out by the authorities, envisaging the supply of fuel to residential consumers just thrice a day for cooking and heating, from November through February. That the residential users will get only limited supplies in spite of the diversion of a large quantity from the power and non-export industrial sectors, as well as imported LNG, underscores the growing magnitude of the gas crisis each year.

Gas shortage is likely persist in the absence of new discoveries. Till then, we will be dependent on expensive gas to partially meet our needs. But there is a way to cut its wasteful and inefficient use, albeit politically difficult since it involves a massive increase in gas prices for residential consumers as well as a reduction in subsidies for industry, especially inefficient units. The government will also have to use policy tools to shift residential consumers to LPG for cooking and heating water. That will allow the government to divert the available gas for efficient electricity generation and direct industrial use for co-generation where efficiencies are far greater than its use for cooking and heating at home. This will help near full recovery of costs and reduce the subsidy burden on taxpayers. This is also important because huge gas subsidies are being pocketed mostly by affluent households while the vulnerable segments remain dependent on expensive LPG or other fuels. That is not all. Line losses are high and theft is rampant in pipeline networks of both the SNGPL and SSGC. The incidence of ‘unaccounted for gas’ is estimated to be close to 18pc due to line losses and theft. The shift to LPG can address this issue too. Unless reforms are implemented, the nation’s gas woes will continue to increase.

Published in Dawn, October 28th, 2022

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