By Wasim Iqbal

The managing director (MD) of Sui Southern Gas Company Ltd (SSGC) has admitted that domestic sector in Sindh, particularly in Karachi, was facing gas shortages because gas supply to general industry and captive power could not be curtailed due to stay order in courts and insufficient LNG supply.

In a briefing to the National Assembly’s Standing Committee on Energy, chaired by Junaid Akbar, the MD SSGCL said that gas of around 130 general industry units were curtailed out of 400, which resulted in shortage of gas supply to the domestic sector.

He said that the SSGCL was facing 250 to 260 mmcfd gas deficit as demand peaked to 1,250 mmcfd against supply of 1015 mmcfd in the current month. The gas shortage in January 2022 would further increase to 280 mmcfd as demand would be around 1296 mmcfd and supply would be the same, he added.

He said that the general industry and captive power units did not honour obligations of their contracts, which allowed government to curtail gas for three months of winter, The RLNG volume also decreased to 75 mmcfd from 150 mmcfd available previous winter. In addition, he maintained the flow of indigenous gas to Karachi was also reduced by seven to eight percent.

He further said that the SSGCL was supplying 200 mmcfd to Quetta as temperature there was in minus zone. An official of the Petroleum Division apprised the committee that in the LNG prices internationally were unprecedentedly high which reached $56 per mmcfd.

The receivable of the Pakistan State Oil (PSO) reached Rs150 billion and Pakistan LNG Ltd (PLL) was Rs140 billion. The government had budgeted no subsidy on gas supply and no mechanism to bill the end consumers, he added. He maintained that the Petroleum Division submitted a summary to the Finance Division to release some fund for both government entities (the PSO and the PLL).

The chairman committee asked why the Petroleum Division did not arrange imported LNG after receiving demand for current winter. The additional secretary PD informed the committee that 80 percent LNG delivered via long-term agreement and 20 percent through spot purchase, as they could not ink agreements for the whole year when the demand fluctuated.

Earlier, the official of the PD apprised the committee that circular debt to oil and gas sector reached Rs1.2 trillion and receivable of both gas companies were Rs500 billion for local gas and Rs300 billion for LNG.

The MD Sui Northern Gas Pipeline Limited (SNGPL) informed the committee members that to ensure smooth supply of gas to the domestic sector, the gas to captive power plants, CNG outlets, cement, and also power sector was curtailed in Punjab.

The chairman committee warned the Minister for Energy, Hammad Azhar, to submit requisition; in case, the minister would not attend the committee meeting. He was asked to come to committee meeting on several occasions, but he refused to attend the meeting.

The members committee warned the management of the SNGPL that they would not tolerate, if unelected representative of the federal government inaugurated the gas development scheme in Punjab. The MD SNGPL replied that the gas company was following the guidelines of the Division in this respect. The Committee on the issue of incomplete and unfinished schemes of legislators expressed strong dissatisfaction over the answers given by the ministry.

Saqib Rubab, an official of the SNGPL explained that Prime Minister Imran Khan constituted a committee to complete the gas schemes in various constituencies across the country after meeting with parliamentarians. The gas company had started working on ongoing development project of laying 5,000km long gas pipeline.

Responding to a question regarding moratorium on new gas connections, he said that it was a temporary phase and in couple of weeks, the government would provide them guideline on new gas connections.

The committee inquired from the OGRA chairman whether there is any political pressure on you regarding performing the official commitments; in response, he clarified categorically that there is no pressure over them and they were performing their duties as per rules and regulations.

The committee deferred the bill namely; The Petroleum (Amendment) Bill, 2021 (government bill), as the ministry requested for further time to complete the consultation process with the relevant stakeholders. The committee was told by the DG (Gas) Petroleum Division said that as a country we are lacking storage capacity; otherwise, this issue could be tackled permanently.

While answering the committee regarding price hikes in petroleum products, the Petroleum Division officials stated that due to international rise in the prices we are constrained to raise prices in Pakistan.

The story was originally published in Business Recorder on December 22, 2021.