SUNDAY JANUARY 08:IP project needs to be undertaken on fast track basis: Cabinet directs MoP to reduce UFG losses

ISLAMABAD: The Cabinet has directed the Ministry of Petroleum and Natural Resources to undertake the Iran-Pakistan (IP) gas pipeline project on fast track basis, and reduce unaccounted for gas (UFG) losses from 12 percent to 6 percent, official sources told Business Recorder.
The Cabinet gave these directions at a time when the country is facing ruthless gas load shedding, leading to law and order situation in the country. Last week, the Economic Co-ordination Committee of the Cabinet (ECC) had approved the appointment of Financial Advisor (FA) as per the procedure and confirmed the decision of steering committee to the extent of provision of irrevocable sovereign guarantee and arranging equity committee by the public sector entities (PSEs).
The Cabinet was informed on January 3, 2012 that the current gas production in the country is over 4 BCFD, whereas the demand is over 6 BCFD. The transmission and distribution of gas is done mainly by the two gas utility companies--SSGC and SNGPL--and partially through direct supplies by producers. Historically, gas demand during winter increases due to manifold increase in consumption in the domestic sector, in almost all areas on SNGPL system and in some areas of SSGC system.
The estimated natural gas demand supply position on gas network of both gas utility companies for winter 2011-12 depicts a shortfall ranging from 668 MMCFD to 1061 MMCFD. To ensure optimal utilisation of natural gas for the best socio-economic development of the country, the natural gas allocation and management policy 2005 was approved by ECC for implementation during high demand and/or short supply periods. However, to share the burden of gas shortages by all sectors, keeping in view socio economic considerations, the sectoral priority order is not being followed for last few years, and every winter separate gas load management programs are being approved, as a practice.
While hearing constitutional petitions on the issue, the Peshawar and Sindh High Courts, through separate decisions, have directed the federal government and gas utility companies to adhere to Article 158 of the Constitution while dealing with all stakeholders in the respective provinces vis-à-vis the supply of gas. The decisions have literally led to restricting gas load management to Punjab.
The decisions taken in the meeting chaired by Minister for Petroleum and Natural Resources with stakeholders on 16th December 2011 were presented to the Cabinet for approval.
The decisions were as follows: (i) Domestic and commercial sectors would continue to get normal gas supply, across the country; (ii) SSGC system-Fauji Fertiliser Bin Qasim will be supplied 50 MMCFD gas during December 2011 and thereafter the plant will go for annual turnaround for 60 days; (iii) CNG stations will observe one day and two nights as gas holidays per week; (iv) Captive power plants (CPPs) and general industry will be closed on every Sunday; (v) Kotri and Jamshoro plants will be supplied no gas from December 2011 till February 2012; (vi) KESC will be supplied upto 65 MMCFD during December 2011 and up to 110 MMCFD during January and February 2012 and up to 120 MMCFD in March 2012, depending upon availability; (vii) Pak Steel will be supplied gas as per its allocation of 29 MMCFD ; and (viii) no gas load management in Balochistan.
SNGPL System: (i) CNG stations will observe three gas holidays per week, which may go up to 4 days in January and till mid-February depending upon domestic load; (ii) industrial sector will observe three and half gas holidays per week in January and February, which may be increased depending on domestic sector loads; (iii) all fertiliser plants will go on annual turnaround/ maintenance till 15th March 2012; (iv) no gas load management in Khyber Pakhtunkhwa and; (v) no gas shall be available for general industry and CP units having nine months gas supply contracts. The rest of the industry may also face curtailment as domestic load increases.
Gas supplies to following power plants will continue: Guddu-90 MMCFD, Liberty Power-50 MMCFD, Engro Power-75 MMCFD, Rousch-85 MMCFD and FKPCL-19MMCFD. There will be no gas supply to power plants of Pepco and IPPs where SNGPL has no contractual obligation.
After detailed discussion on gas shortage in the country, the Cabinet also decided that Prime Minister will immediately inaugurate the Kunar Pashagi gas field to get 100 MMCFD gas and four synthetic plants, two each in SNGPL and SSGC, will be installed to add another 200 MMCFD gas to the system. The Cabinet also decided that to minimise the difficulties faced by the public, subsidy in power sector will be increased.
The Energy Committee will meet and oversee the energy shortfalls on day to day basis. Secretaries of Cabinet and Finance have been directed to sit together to resolve the issues of LNG with Ogra, make recommendations and chalk out modalities within one week.
The Cabinet also constituted a committee, headed by Minister for Petroleum & Natural Resources comprising Minister for Kashmir Affairs & Gilgit Baltistan, Minister for Defence, Minister for Religious Affairs and Minister for Water and Power to meet industrialists and other stakeholders to formulate practical recommendations for gas load management for winter 2011-12. The committee will submit its report to the Prime Minister.