Political pedal on the gas

General elections are fast approaching, and you do not have to look at your calendars for that. A look at the newspapers will suffice. Political considerations have once again taken over economic ones. Not that they ever had the priority, but the pace of making politically motivated decisions, or even merely statements, has visibly increased. The ongoing, soon-to-be-over saga between Sindh and federal government, over the natural gas, is a true reflection.

That the Chief Minister Sindh threatened to take over Sui Southern Gas Company Limited (SSGC) and halt supply was a bit over the line. But in a strictly constitutional scenario, was not entirely wrong. Needless to say it came at the back of delay in gas supply to a certain power plant. Both sides have different stories to tell. But without missing the point, CM’s outburst seems to have come out of political compulsion.

Sindh government has rightly pointed out the political abuse of gas moratorium by the ruling party in the centre. That said gas connections on political basis in Punjab were doled out more than a year ago. The realization only set in after hurdles in securing gas supply for one of its own projects, and as the general elections near.

The Sindh vs. federal episode should be expected to get over soon, as it seems more of a procedural matter. It is the decision taken by the Cabinet Committee on Energy that could have grave consequences going forward. It pertains to opening LNG for all consumer categories, subject to cabinet approval, despite relevant ministry’s opposition to supply LNG to the highly inefficient captive power plants.

Experts have long argued with research based evidences, that supplying gas to captive power plants is the most inefficient use of the precious resource. But the priority right now seems to eradicate power load shedding at any cost, as the government finds itself behind schedule in completing few of the fast track projects. Still think that the government would actually listen to the Ministry for Planning’s reservations; read the first sentence.

While LNG’s role towards addressing gas shortage cannot be undermined, it should not be injudicious. All of it will eventually be added to the weighted average tariffs for both power and natural gas. Being an imported fuel, the balance of payment equation is also ever present. Government would do well to instead increase recovery of gas distribution companies through reduction in UFG losses, and focus more on more domestic exploration.