Winter without gas

Published January 24, 2013

IN August, our petroleum ministry told us that the forthcoming winter would be better in terms of gas shortages.

There’s a new petroleum policy, we were told. Supplies would be increased, we were told. Well-head prices have been hiked, for new wells that is, by 60 per cent, we were told. Road shows will be undertaken, there was mention of pipelines and LNG imports, CEOs of leading oil and gas companies have been met with, we were told.

Now in the depths of winter, standing amidst the most crippling shortages of gas we have ever seen, it seems the only thing we have an abundance of is hype. If you could fire your boilers, foundries and furnaces with the words and promises that have issued forth from this government and it’s cohort of ministers, there’d be no shortage of any fuel or energy in this country.

But unfortunately for the rest of us there is this inconvenient fact called reality. In reality the promises made in August fizzled by December. The gas situation this winter has been the worst on record, and we are set to go to an even worse situation next winter.

At one level there is a basic reality beneath all this. That reality is the dwindling of our gas supplies, which are now depleting exponentially. Projections drawn up by the Petroleum Institute of Pakistan show that the deficit between supply and demand will increase by a factor of eight in less than a decade.

But the real question now is, how well is this situation being managed? Two things are essential. First, greater transparency in how the dwindling gas reserves are allocated to different categories of consumers. Second, arranging future supplies.

In both areas, the government has failed to perform. Greater transparency in how allocations are made would reveal a very complicated picture.

For instance, in December, close to 500,000 tonnes of furnace oil were supplied to power plants across the country, clearly meaning that gas allocations to these plants were slim during this month. Then suddenly, in January, furnace oil shipments dropped to less than 45,000 tonnes, a factor of 10.

Here’s what happened in all likelihood. Gas supplies to the power plants picked up in January, touching something like 275 units by Jan 20, excluding the 230 units provided to the Uch power plant because that gas comes from a captive field and is not really available for consumption anywhere else.

These are numbers only for the independent power producers, those private-sector operators who came in under the 1994 policy. The four big plants that came under the 2002 policy are still struggling for their gas, as are the government-owned power plants, known as Gencos (generation companies).

Meanwhile, the fertiliser plants, the other large consumer, have been waiting for over a year now for the government to make some headway on a plan to put them on a parallel network supplied by a small number of captive fields.

The four large system-based plants, meaning those on the Sui Northern Gas Pipelines Ltd system, have been promised by the government that their supplies will be arranged through a captive system of this sort. But they have been waiting and executing innovative rotation schemes to utilise their curtailed allocation of the vital feedstock.

This has been another winter of discontent for these players, waiting in vain for their lifeblood to arrive.

Meanwhile, industry owners across Punjab have held angry press conferences saying they’ve received virtually no gas since Dec 22. From soap manufacturers to makers of hosiery and garments, everybody has a story of their own to tell.

Some speak of betrayal at the hands of the petroleum ministry, which allegedly gave them commitments of meeting partial requirements which were then reneged on. Others are fuming at the federal government, which they say has given priority allocations to those provinces where gas is produced, meaning Sindh and Khyber Pakhtunkhwa, thus starving Punjab.

“They’re running tandoors and making chapli kababs with gas in Peshawar, while our export-oriented industry sits idle over here,” fumed one association leader from Faisalabad when I spoke to him over the phone a couple of days ago.

I asked him what he had against chapli kababs. He didn’t get the joke. That’s how serious things are: they’ve lost their sense of humour in Faisalabad.

But here’s the kicker. Everybody is asking why the APTMA, the largest industry association in the textile sector, which has been known to go to bat over gas issues many times in the past, is silent this time. Maybe they’ve developed a stoic patience for suffering, although I doubt it.

And there are domestic consumers. I hear stories of people doing their cooking during days when CNG stations are shut because that’s the only time they get any pressure.

I hear stories of people installing pumps made from used and discarded compressors from fridges and air conditioners to suck gas out of the distribution system and increase the pressure in their homes.

One family that used this contraption reports it exploded on the second day of use. Another family says their neighbourhood has so many such contraptions that they only get gas when the electricity goes out and shuts down all these compressors in the vicinity. A small cottage industry has cropped up in the manufacture of these things. Of course, matters were supposed to be much better this winter. We had a new policy, which would ensure new supplies, we were told.

The CEOs of big oil and gas companies had assured our petroleum minister that supplies would be available and he had rushed to the public with the good news in hand. Instead, we have Faisalabad residents railing against chapli kababs and people quite literally stealing the heat from their neighbours stoves.

The writer is a Karachi-based journalist covering business and economic policy.

khurram.husain@gmail.com Twitter: @khurramhusain

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