As the gas crisis worsens due to non-availability of required LNG in winter season, CNG stations in Punjab and K-P will run dry from November 2022 to March 2023.
While the government has to import 12 cargoes of LNG every month, Pakistan LNG Limited (PLL) has not been able to import LNG and hence the country will have 10 cargoes of LNG in December while it will be nine cargoes of LNG in the remaining months available every month. The gas companies will therefore have no choice but to cut 50% of the gas supply to their own power plants due to the reduction of LNG imports.
No LNG will be available for CNG stations in Punjab and K-P during winter season. Punjab is also suffering from gas crisis due to low domestic gas production.
Government officials said there will be no curtailment of gas supply to the fertilizer sector in the Sui Northern Gas Pipelines Limited (SNGPL) system. Gas supplies to the domestic sectors will be steady, as the government has no plans to reduce supplies due to the potential political backlash it could cause.
As directed by the federal government, SNGPL sells regasified liquefied natural gas (RLNG) to various subsidized sectors, including fertilizer manufacturers, export-oriented consumers and the domestic sector.
SNGPL's receivables from the government against RLNG subsidy till date stand at Rs 199 billion. As a result of the subsidized tariff, the ability of SNGPL to pay the RLNG suppliers i.e., PSO and PLL has been severely affected. Currently, PSO and PLL dues have increased to Rs 284 billion and Rs 135 billion respectively.
The power sector has been paying in full, but its receivables have risen to around Rs 115 billion, leading to significant delays in payments to suppliers.
In terms of SNGPL system/natural gas, the receivables are more than Rs 400 billion, while that of Sui Southern Gas Company (SSGC) is around Rs 300 billion.
SNGPL informed the government that the fact that 90% of domestic consumers fall under the first two subsidized boards remains the biggest problem.
In order to protect the RLNG supply chain, gas companies have requested the government to provide upfront subsidy to end consumers or ensure full price recovery through revision of selling price.
The selling price will have to be increased to around Rs 1,722/MMBtu to recover the entire accumulated receivables within one year, which will again come down to around Rs 900/MMBtu in subsequent years.
Gas companies said that in the last seven years, all plans to increase the price by leaps have remained unimplemented and may not be appropriate.
The Sui government and companies are very keen to open up the gas market to third parties, as the establishment of new LNG terminals is essential to meet the country's long-term gas requirements.
Two LNG terminals are currently in operation with a total re gas IFI cation capacity of 1,200 MMC FD. However, they are not fully utilized.
About 900 MMC FD of LNG is imported through long-term contracts, while the remaining 200-300 MMC FD is to be procured on the spot market. However, LNG importers are unable to obtain spot costs due to a highly inflated market.
Instead of spending massive funds on new projects, the PGPC terminal can be easily expanded from 600 to 900 MMC FD after modification. With a larger FS RU at the Eng RO terminal, it's re gas IFI cation capacity can also be significantly increased.
SNGPL is diverting RLNG to domestic and commercial sectors as per ECC decision and government guidelines to ensure uninterrupted supply of gas to high priority sectors.
The diversion of liquefied natural gas to domestic consumers continues as domestic supplies have declined. An estimated Rs 108 billion has been accumulated so far as arrears due to RLNG diversion.
Gas companies have asked the government to push for the Pakistan Stream Gas Pipeline (North-South Gas Pipeline). The existing transportation capacity of 1,200 MMC FD from Karachi to the north, which can be increased to 1,900 MMC FD, will still be insufficient to meet demand during peak periods.
Gas companies argue that the North-South pipeline is therefore necessary to meet the country's energy requirements.
Similarly, they urged the government to complete the TAPI or IP pipeline projects, as it will lead to additional volumes of gas at lower prices.
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