Gas shortfall set to almost double next year

ISLAMABAD: Amid an ongoing controversy over gas shortages, the federal government on Wednesday said the shortfall would almost double next year unless infrastructure constraints were phased out through cooperation of the stakeholders concerned, particularly Sindh.

At a meeting of the Cabinet Committee on Energy (CCoE) presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh, the ministry of energy reported that gas shortfall was increasing due to about 7 per cent decline in domestic gas production and 5pc growth in consumption when compared with last year, effectively creating a 12pc gap between the demand and supply.

This was despite the ongoing subdued economic growth rate. “Due to lack of gas exploration during the last 10 years, production of gas had declined by 7pc while demand had risen by 5pc annually which had resulted in a heavy gas shortfall which stood at nearly 270mmcfd (million cubic feet per day) in December 2019,” an official statement said. This shortfall was estimated to reach 477mmcfd in 2020-21.

To address the shortfall, the government has decided to build additional terminals and five new private terminals had been awarded in November 2019, while the process for a dedicated pipeline of more than 1,200mmcfd required to carry imported liquefied natural gas (LNG) from these terminals to the northern parts of the country would also begin soon.

Cabinet panel informed that due to lack of exploration during the past 10 years, gas production has declined by 7pc while demand has risen by 5pc

Sources said Dr Abdul Hafeez Shaikh asked the petroleum and power divisions to come up with a detailed plan to overcome the shortage of energy and improve gas supplies throughout the year. He also asked questions about the price differential between the gas and electricity and desired fresh ideas as to how to balance the surplus in electricity and deficit in natural gas.

One of the major reasons for this upsurge is the consumption of gas in winter season, almost double than the summer, by the domestic sector which prefers to use heavily-subsidised gas as compared to other energy sources, the meeting was told.

The meeting was explained that average electricity and gas price currently stood at about 60:40 and greater number of consumers was relying on gas for heating and cooking in winters when compared to electricity. Even in gas, about 36pc gas consumers were being provided gas at Rs121 per unit against an average price of Rs780 per unit for domestic gas and almost Rs1,600 per unit for imported LNG.

The committee was given a detailed briefing on the current situation of demand and supply of gas/Re-gasified LNG, natural gas allocation and management, average gas supplies, winter load management, indigenous gas production, supplies and consumption in different regions and LNG requirement by the Sui Northern Gas Pipelines Ltd (SNGPL)/ Sui Southern Gas Company (SSGC).

The meeting was also informed that residential consumers of Karachi were anticipated to suffer the most next year due to gas shortage as the consumption had increased by almost 20pc this year.

The CCoE was further told that work to add 70mmcfd to the SSGC system and take LNG supplies for the SNGPL up to 1,300mmcfd had already started but its implementation was hampered by grant of Right of Ways from the Sindh government which had granted only one so far and two more were still awaited since last summer. With these measures, nearly 70mmcfd gas is likely to be added to the SSGC by the end of this month.

The committee noted that there was a need to work on contingency plans for 2020-21 to overcome the gas shortage and improve its supplies by using energy produced through gas and electricity as a whole.

The meeting also asked the ministry of energy to brief it in the next meeting on the current situation in the power sector so that the issues and problems in both the gas and power sectors could be properly analysed.

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