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Govt seeks ‘zero shortage’ gas plan for next winter - Inside Financial Markets

Govt seeks ‘zero shortage’ gas plan for next winter

– Business Recorder

ISLAMABAD: The Federal Cabinet has sought next year’s zero gas shortage plan from the Petroleum Division within one month, after grilling the latter on the gas crisis in the country, especially for textile industry in Karachi, well informed sources told Business Recorder.

The issue of gas came under discussion during consideration of National Electric Power Regulatory Authority (Nepra) Annual Report, 2020-21 and State of Industry Report, 2021.

According to sources, the issue of electricity theft and transmission losses was brought to fore and it was noted that running defaulters had surged to an alarming amount of Rs. 640 billion. The Minister for Energy apprised that while transmission losses had been curtailed through renovation of infrastructure, the only sustainable solution to theft and default was privatization of Discos. The members urged to speed up this process.

In response to concerns expressed over severe gas load shedding in Karachi, Minister for Energy apprised that supply of gas to around 1900 industrial units was normally discontinued during the month of January every year to ensure the availability of gas to the domestic consumers. However, Sindh High Court had granted a stay order and as a result, these industrial units had been kept on line to the detriment of household consumers. Clarifying the misconception that gap in supply and demand could be filled through imported LNG, he revealed that the government incurred loss of Rs. 9 billion for injecting 100 mmcfd of LNG in the system of 4000 mmcfd. In view of the recurring shortages every winter, the members exhorted the need for preparing a comprehensive plan, well before the next season, to meet the shortfall.

The Cabinet directed the Petroleum Division to submit a report on the measures adopted to manage gas shortages during this winter, and reasons for their failure to avert the current gas crisis despite gas shortage prediction made last year, with a view that the same situation should not be repeated in the coming winter.

The Cabinet further directed the Petroleum Division to formulate a comprehensive plan to ensure no gas shortages next year and present the same to the Cabinet within one month. The Plan should include: (i) the estimated total monthly requirements for the next winter season against indigenous gas available;(ii) the quantities required to be imported to meet the shortfall and a concrete plan with possible options of various sources, funding requirement, logistics (both international and local), legal, etc., requirements;(iii) clear demarcation of responsibly as to what actions are required and by whom including Provincial Governments with definite timelines;(iv) contingency/ Back-up Plan; and (v) Cabinet directed that comprehensive presentations on the twin challenges of water shortages and population growth shall be made to the Cabinet by Water Resources Division and National Health Services, Regulations and Coordination Division respectively. During discussion, the Minister for Industries & Production requested that power tariff incentives given under the industrial package should be extended to the SMEs.

The Minister for Energy clarified that incentives were applicable to all sizes of industries; however, since most of SMEs were using commercial instead of industrial meters, they could not enjoy the concessions under industrial package. While agreeing, in principle, to encourage SMEs he sought time to run the numbers.

The hardships being faced by the farmers due to shortage of urea in the country were once again highlighted. The members were informed that despite gas shortage, the supply to fertilizer plants was continuing. However, temporary shut downs of plants due to technical or security reasons have further aggravated the problem. The situation would improve with the arrival of shipments of imported urea from China end of February to early March.

Syed Zaki Hussain

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