State of gas industry

Lack of information and delay in information have long been a hallmark of Pakistan’s energy authorities, be it the relevant ministries or related institutions. Researchers are often left with no option but to base the studies on stale date more often than not. In this age of delayed information, Ogra’s latest released report titled: ‘State of The Regulated Petroleum Industry 2015-16’ is a very welcome and not-so-outdated addition.

The report comprehensively covers the demand and supply statistics of all key categories, mainly oil and natural gas. What is also impressive is the face that unlike the more fancied ‘Pakistan Energy Yearbook’, Ogra’s report is also forward looking, in addition to being more timely.

Off to some report findings then. The most telling one is the number of gas consumers added during 2015-16. Residential sector now constitutes 21 percent of total consumption, up from 17 percent in 2010. With the overall consumption remaining static, almost all additional cubic feet have gone to serving domestic gas connections. The consumer base went up by another 5.1 percent, with four-fifth of new connections being doled out in Punjab. Of the 324,501 new connections, only 22 were industrial gas connections, all but one in Sindh.

Little wonder that the share of general industries in the total gas consumption pie has come down crashing from as high as 26 percent in 2010 to mere 9 percent in 2015-16. The overall gas consumption has stayed flattish for quite some time, and the axe of excess demand has invariably fallen on industries. While there may well be many other factors why Pakistan’s export are no more competitive, curtailed and disrupted gas supply is surely one amongst others.

Some of the industrial consumption goes to captive power, which accounts for 11 percent of the pie. Experts have long argued how captive power has not really served the entire energy chain well enough, and the policymakers would do well to curtail the natural gas usage for captive power. But that does not seem to have been paid any attention too, as the captive power pie gets increasing every year.

All this while, the unaccounted for gas losses have kept on building to unprecedented levels. Ogra’s report puts the number at a massive 11.2 percent for 2015-16. It is not only light years ahead of the globally accepted benchmark of 1-2 percent, but has deteriorated over the years. Recovery, tariff determination, and subsidies will always be problematic, unless the menace of UFG is dealt with once and for all.