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Winter to bring with it massive gas outages, rise in tariffs

The industry will suffer from serious gas shortages this winter, whereas gas tariff would also be revised upward to speed up exploration, said Sui Northern Gas Pipeline Limited (SNGPL) managing director Arif Hameed.

Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Monday, he said that massive gas outages may create problems for industrial consumers this winter as the province faces a severe gas deficit at the moment.

Currently, the country is facing an acute shortage, which would further rise during upcoming months of December and January. He said that in the new gas policy, the gas tariff would be improved to facilitate gas exploration in the country.

However, he said a number of projects are well on their way to introduce liquefied petroleum gas (LPG) as an alternate fuel. The SNGPL is advising new housing societies to put up LPG plants as there is moratorium on supply of gas to new industrial units and residential societies, he said.

Hameed said that due to high gas tariffs, the pilferage of gas has increased but the SNGPL has introduced new technology to detect theft. On Iran-Pakistan gas pipeline project, he said that tenders for the said projects have already been issued, which make the point the government is working on the project efficiently.

The LCCI president Irfan Qaiser Sheikh said that the shortage of natural gas has become a burning issue for the industries as last year the industry was provided gas for only 180 days and there is a need to find out new reserves as current gas reserves are depleting fast and it will become insufficient to meet the national demand in future.

He said the SNGPL has done a good job on gas theft issue but the current line losses are over 10 percent, which are too high as compared to four percent in the recent past. “The LCCI understands that minimising the pilferage can result in more revenue collection as well as fair load management,” he said.

It has been seen that the SNGPL is expanding its system without considering the increasing gap of gas supply and demand. Gas shortfall is estimated to reach 2.5 billions cubic feet per day (BCFD) in 2014-15, 3 BCFD in 2015-16 and 3.5 BCFD in 2016-17. Hence, the gap is likely to shoot up to 5 BCFD in 2020-21, unless major gas discoveries and field developments are made.

Sheikh said the LCCI members often complain of the rigid behaviour of the staff of the SNGPL with regard to imposing penalties unilaterally. Without serving any showcause notice to the clients, their meters are disconnected for lab testing.

The LCCI suggests that the concerned clients should be informed before taking any action and there should be third party testing or inspection. Despite making a number of complaints about low gas pressure, there are still many industries that are suffering to a great extent, he said, adding their whole lot/batch gets wasted and they remain under this fear while making productions.

He said that the investment in gas exploration and extraction is seriously lagging behind demand trends. As a result, the country continues to rely heavily on fuel oil. It is suggested to restructure Pakistan’s gas sector to make it more efficient and to attract private sector investments.

The reserves at Kunar Peshaki near Hyderabad could produce 280 millions cubic feet of gas per day. These reserves could be vital to improve the supply position and bridge the present shortfall.

There are known gas reserves at Kohlu as well. This huge reserve cannot be put on the back burner and needs to be explored immediately as it is sufficient to meet Pakistan’s energy requirements for several years.

Moreover, gas used in the steam units should be diverted to combined cycle plants that operate at an efficiency of 48 percent, compared with around 30 percent for the existing steam units.

The prices of liquefied natural gas (LNG) must be brought down to provide alternate fuel to the general public. Moreover, LNG filling stations must be introduced as this would help in reducing the demand for natural gas to some extent.

He said that Iran-Pakistan gas pipeline project can rescue industry from these crises. The work on construction of 785 kilometres gas pipeline should be accelerated on emergent basis. Initially, it will bring around 750 millions cubic feet per day (MMCFD) of gas, which will gradually be increased to over 1.5 billion cubic feet per day.

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