Gas Sector Circular Debt Of Pakistan Increases To Rs.250 Billion – Research Snipers

Gas Sector Circular Debt Of Pakistan Increases To Rs.250 Billion

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The government of Sindh was accused of making the gas crisis the worst in Karachi by the petroleum minister Omar Ayub Khan, Pakistan’s circular debt of the gas sector alone ballooned to Rs.250 billion.

While talking in a press conference along with Special Assistant to Prime Minister on Petroleum Nadeem Babar on Thursday, Omar Ayub reportedly blamed the government of Sindh for lack of cooperation in giving the Right of Way for building a pipeline at Port Qasim, though the issue had been raised for the past one and a half year.

“Now, the matter became worse and has gone way beyond Article 158 of the Constitution that gives the right to gas-producing provinces to utilise the local gas first,” he said.

Omar Ayub pointed out that a gas conference was held at the Prime Minister’s Office following the recommendation of the Council of Common Interests (CCI) to build consensus on a weighted average gas price.

According to Omar, the circular debt of Pakistan in gas sector has jumped to Rs250 billion due to the absence of the weighted average price.

Responding to a question regarding electrocutions during Karachi rains, he said that a majority of shareholders in K-Electric were from the private sector and blamed the Sindh government for backing the power company.

The petroleum minister added that a National Electric Power Regulatory Authority (NEPRA) member belonging to Sindh had played a key role in reducing the fine imposed on K-Electric.

Speaking at the conference, Babar gave warning of a gas shortage of around 250-400 mmcfd in the Sui Southern Gas Company (SSGC) system, which would affect all sectors including commercial and domestic consumers. “There will be no option available with the government other than rationing of gas for different sectors in Karachi,” he added. “However, the domestic sector will be given priority in the provision of gas during cooking hours.”

Similarly, Sui Northern Gas Pipelines Limited (SNGPL) would face gas shortage of 300-350 mmcfd in the peak winter season, therefore, there would be no possibility of diverting liquefied natural gas (LNG) to the SSGC system, he said.

If the Sindh government cooperates in giving the Right of Way for building the pipeline, the federal government will complete it by the end of December 2020,” he added.

Babar added that two LNG terminals, currently handling 1.2 bcfd of LNG, would be able to handle 1.3 bcfd following completion of the pipeline. However, he said Sindh province was not ready to consume LNG and the weighted average gas price was the only option. The two government officials held the previous Pakistan Muslim League-Nawaz (PML-N) government responsible for ignoring domestic gas exploration activities.

“The previous government awarded just one exploration block during its five-year rule and its impact will continue to reflect over the next 3 years,” Babar said.

He said the PTI government had conducted an auction of 10 exploration blocks and it was now planning to announce the auction of 20 more blocks in the first week of October.

Babar pointed out that the annual depletion of raw gas was 9%, which would contract to 6% after the induction of new gas discoveries. The special assistant added that 26 discoveries of gas had been made in the past 24 months that added 250 mmcfd to the system, however, there had been depletion of 400 mmcfd.

Responding to a question regarding a report of Prime Minister’s Inspection Commission, he said the report was not based on actual data.

“After preparing a report, the Petroleum Division invited a team of the Inspection Commission to build consensus on the data,” he said. “Live data transmission from wells has been active and the Oil and Gas Regulatory Authority (OGRA) has access to it.”

While answering a question about the gas infrastructure development cess (GIDC), Babar said four parties including the stakeholders from the All Pakistan Textile Mills Association (APTMA), CNG, and fertilizer sectors had forwarded a review petition in the Supreme Court. According to him, APTMA had obtained a stay order from the Lahore High Court (LHC) on GIDC calculation, adding that SNGPL and SSGC had included GIDC in the bills of September for recovery in 24 installments.

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