ISLAMABAD: The Ministry of Water and Power has informed USAID that it would be unable to allocate available gas from new gas fields, including Kunnar Pasakhi, Sinjhoro fields, to the power sector because of opposition from the Ministry of Petroleum and Natural Resources. This was the crux of a presentation given to USAID by the Ministry of Water and Power.
At present, SNGPL and SSGC are facing shortfall of more than one billion cubic feet gas per day (bcfd), which is projected to reach 1.8 bcfd in 2014-15, despite addition of Pasakhi/Kunnar gas field, other small fields and anticipated commissioning of Iran Pakistan (IP) gas pipeline and LNG project. With the progressive depletion of major gas fields, it may not be possible for SSGC/SNGPL to meet the demand of existing consumers if all available gas from new discoveries is allocated to the power sector.
USAID has also been informed that there were many issues in domestic gas exploration and import of gas through pipeline and LNG. "LPG lobby is pushing to take over LNG projects and create a monopoly," sources alleged, adding that a study is in progress that would determine which sectors may receive gas, so that economic benefit can be optimised.
The government is also mulling over the option to increase gas prices for CNG sector and captive power generation plants to reach price parity with petroleum products prices and thereby discourage the use of gas as a cheaper product under power sector reforms programme.
The Ministry of Water and Power informed USAID that since 2007 power generation cost increased due to change in fuel mix by 30 percent, rupee depreciation by 35 percent and increase in fuel prices by 30 percent. Major drivers of precarious financial situation are as follows: (i) shift towards more fuel oil in a rising oil price environment and rupee devaluation; (ii) reduced gas allocation for power generation; (iii) no tariff increases between 2003-2007 period; (iv) non-payment of tariff differential; and (v) increased arrears, especially of provinces.
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