Gas load-shedding inevitable

The energy crisis in Pakistan remains far from over. Even during winters when power demand is relatively lower, outages are still occurring across the country. This is expected to continue in the future. (Read: Power: load-shedding to be back?” published on Jan 1, 2019) 

But it’s not just power. Gas has a similar story. With winters in full swing, the recent gas disappearing act was not taken kindly by the new PM. Inquiries were launched, committees formed and summons made. The industry supply was cut off to accommodate domestic consumers. But even domestic consumers have decried the low pressure and gas load shedding.

This is a repeat incident which has happened annually for the past decade now. The industry is sacrificed to bridge the peak demand shortfall only for domestic consumer demand to remain unfulfilled.

Some would say the rising RLNG in the system should be alleviating some of the crisis. According to OCAC figures, the import of RLNG increased by almost 41 percent in 1HFY19 to reach 3.72 million tonnes. However, pumping more RLNG is not going to be a fix for the country’s gas woes especially for the peak demand winter months of Dec-Feb.

For starters, the biggest user of gas in Pakistan remains the power sector which utilises almost 32 percent of the resource according to Ogra figures. If the share is reduced, it is almost certain to increase the cost of generation of electricity which is already high enough.

Next in line are domestic consumers who roughly who use 21 percent gas. The country’s demand is 6000 mmcfd while production amounts to 4000 mmcfd. In winters, the peak demand shortfall is even higher.

Gas usage statistics for winter months according to consumer segments are not readily available but the domestic consumer demand experiences a steep rise. Recently, the ECC approved injection of RNLG by Sui Northern Gas Pipelines Limited (SNGPL) for domestic and commercial consumption. However, a precondition was that Ogra will allow volumetric adjustment and the financial impact will be on cost neutral basis.

Without getting into pricing which is a major bone of contention in itself, it is safe to assume that with the current system constraints in the gas distribution and transmission system gas load-shedding in winter times will be a recurring event for the foreseeable future.

However, there are silver linings. The number of RLNG terminals in the country is increasing and enhancement of pipeline capacities of utility companies is on the cards. (Read: “RLNG terminals galore” published on Jun 20, 2018) If the UFG losses are brought in line with international benchmarks, things just might take a turn for the better.

Now if gas-loadshedding is inevitable, the important question to ask is which segment should be given the priority. The historical precedent has been the residential and commercial consumers and that is what the PTI government also seems to be doing.

However, this comes at the cost of depriving the industry of cheaper and reliable gas provision which in turn inflates the cost of doing business. In the current economic scenario of a rising current account deficit and lacklustre exports that might not be best strategy to pursue.