Islamabad: CNG stations in Punjab and KP will run dry from November 2022 to March 2023 as gas crisis worsens due to non-availability of required LNG during winter season.
While the government is required to import 12 LNG cargoes per month, Pakistan LNG Limited (PLL) is not able to import LNG and hence the country has 10 LNG cargoes in December. while there will be nine LNG cargoes in the remaining months. Available every month. This will leave gas utilities with no choice but to reduce gas supply to captive power plants by 50% due to reduced LNG import cargoes.
During winter, LNG will not be available for CNG stations in Punjab and Khyber Pakhtunkhwa. Due to low production of local gas, Punjab is also suffering from gas crisis.
Government officials said there will be no reduction in gas supply to fertilizer fields on the Sui Northern Gas Pipelines Limited (SNGPL) system. There will be continuous supply of gas to domestic sectors as the government does not intend to cut supply due to possible political backlash.
Following the directions of the federal government, SNGPL is selling regasified liquefied natural gas (RLNG) to various subsidized sectors including fertilizer manufacturers, export oriented consumers and domestic sector.
The government’s recovery of SNGPL in lieu of subsidy on RLNG is Rs 199 billion till date. Due to the subsidized tariff, SNGPL’s ability to pay its RLNG suppliers namely PSO and PLL has been adversely affected. Currently, the amount payable to PSO and PLL has increased to Rs 284 billion and Rs 135 billion respectively.
The power sector pays in full but its receipts have risen to around Rs 115 billion, which has led to significant delays in payments to suppliers.
SNGPL’s system/natural gas receivables are over Rs 400 billion while Sui Southern Gas Company’s (SSGC) is around Rs 300 billion.
SNGPL informed the government that the biggest problem is that 90% of domestic consumers fall under the first two subsidized slabs.
To secure the RLNG supply chain, gas utilities have asked the government to provide upfront subsidies to end-users or ensure full price recovery by revising the sale price.
The selling price would need to increase to around Rs 1,722 per mmbtu to recover the full accumulated recovery in one year, which would come back to around Rs 900 per mmbtu in subsequent years. .
Gas utilities have said that not all plans to gradually increase prices over the past seven years have been implemented and may not be appropriate.
The government and oil companies are keen to open up the gas market to third parties as the establishment of new LNG terminals is crucial to meet the country’s long-term gas needs.
Currently, two LNG terminals are operational with a total regasification capacity of 1,200 mmcfd. However, they are not being fully utilized.
About 900 mmcfd of LNG is imported through long-term contracts while the remaining 200-300 mmcfd is to be procured from the spot market. However, LNG importers are unable to purchase spot cargoes because of the highly inflated market.
Instead of spending massive funds on new projects, the PGPC terminal can be easily expanded to 600 to 900 MMcfd after modification. With a larger FSRU at the Engro terminal, its regasification capacity can also be significantly increased.
SNG is diverting RLNG to domestic and commercial sectors to provide continuous gas supply to high priority sectors as per PLECC decision and government directives.
LNG shipments to local customers have continued since domestic supply has declined. An estimated Rs 108 billion has been recovered so far due to RLNG diversion.
Gas utilities have asked the government to go ahead with the Pakistan Stream Gas Pipeline (North-South Pipeline). The current transportation capacity of 1,200 mmcfd from Karachi to the north, which can be expanded to 1,900 mmcfd, will still be insufficient to meet demand during peak consumption periods.
Gas utilities claim that the North-South pipeline is essential to meet the country’s energy needs.
Similarly, he has urged the government to complete the TAPI or IP pipeline projects, as this would result in access to additional quantities of gas at affordable prices.
