ECC meeting to discuss gas management plan today

Domestic gas’s average cost comes to around Rs630 per million British Thermal Unit (MMBTU) against Rs1,350 of imported LNG

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ISLAMABAD: The government is set to discuss the gas management plan in a meeting of the Economic Coordination Committee (ECC) of the cabinet on Monday amid dwindling supplies and increase in complaints of low gas pressure.

The ECC meeting is set to be chaired by Finance Minister Asad Umar, it will deliberate upon a four-point agenda which will include allotment of small gas quantities from two fields and problems surfacing from the construction of two LNG terminals, reports Dawn.

The period from Dec-Feb will pose severe difficulties for urban resident consumers due to gas shortfalls and commitment by the government to provide uninterrupted supplies to the industrial sector, especially the zero-rated five export industries at subsidized rates.

According to sources, the petroleum division projected around 50% shortfall to urban population in Punjab and to a degree in Khyber-Pakhtunkhwa (KP).

Both the provinces are supplied gas by Sui Northern Gas Pipelines Limited (SNGPL) and petroleum division has suggested giving direct subsidy to the state-owned entity for domestic consumers with an injection of approximately 150 million cubic feet per day (MMCFD) additional gas at three peak consumption times of cooking hours.

Also, sources said the government could require transferring the whole industry including the five zero-rated export sectors and power generation to imported liquefied natural gas (LNG) rather than local gas supplies.

This would give 150 MMCFD for residential consumers during breakfast, lunch and dinner intervals, even if it needed transferring some LNG supplies to the residential sector.

The daunting task for the government is the price differential which would need their go-ahead for an additional subsidy, considering it has already committed about Rs44 billion subsidy for zero-rated export sectors.

Domestic gas’s average cost comes to around Rs630 per million British Thermal Unit (MMBTU) against Rs1,350 of imported LNG.

The issue is predominantly domestic consumers are empowered to gas price ranging between Rs150 and Rs300 per MMBTU.

As per the petroleum division, if an additional subsidy isn’t given, the domestic and commercial consumers may not get enough gas even for cooking in Punjab, since SNGPL’s domestic share has plunged to around 1,060 MMCFD.

According to estimates, peak demand of residential consumers could reach 900 MMCFD, however, the authorities have advocated not to be concerned about round the clock supplies.

Overall domestic gas supply via the transmission pipeline network is projected at around 2,240 MMCFD including around 1,175 MMCFG of Sui Southern Gas Company (SSC) that supplies Sindh and Balochistan.

And SNGPL supplies stand around 1,060 MMCFD and domestic consumers in its jurisdiction rises to 90 MMCFD in peak winter against 500 MMCFD in summers.

However, the issue has financially exacerbated due to the PTI government’s promise that 100 percent re-gasified liquefied natural gas (RLNG) would be supplied to the zero-rated industry from December 2018-February 2018 at a discounted rate of $6.5 per MMBTU against an original rate of $12.5 per MMBTU.

Once February passes, a mix of RLNG and domestic natural gas in 50:50 ratio would be supplied to zero-rated industry during March-November.