Islamabad, October 12, 2021 (PPI-OT): Meeting of Senate Standing Committee on Petroleum was held under the Chairmanship of Senator Muhammad Abdul Qadir here at Parliament House today. Meeting Commenced with briefing by Ministry of Energy regarding gas shortages/crisis in the Country during last two years and steps taken to overcome the same.
Ministry officials informed the committee that both Sui Companies are making all-out effort to maintain uninterrupted gas supply to all the sectors including domestic and industrial sectors on 24/7 basis. During the summers domestic gas demand reduces but demand of power sector surges which is met by ordering maximum possible volumes of RLNG. Whereas, during the winter season, domestic gas demand increases over 3 times on SNGPL’s network and 2 times on SSGC’s network due to use of water and room heaters and there remains a shortfall even after maximum orders of RLNG by SNGPL. Therefore, load management is carried out to mitigate the demand supply gap.
During winter load management 2019-20 SNGPL effectively managed demand-supply situation. However, supply of gas to non-export General Industry was suspended from 19.12.2019 to 31.12.2019. Whereas, supply of gas to CNG Sector was suspended from 20.12.2019 to 31.12.2019, due to enhanced gas consumption by priority domestic sector owing to severe cold wave. Upon increase in ambient temperatures, supply of gas was restored to non-export General Industry from 01.01.2020 whereas supply to CNG Sector was allowed 2 days a week (12 hours per day) from 01,01.2020 till 13.02.2020, after which there was no curtailment of supplies.
During winter load management 2020-21 SNGPL faced delays in arrival of vessels and late berthing of cargos, resulting in demand-supply gap on our system during the second half of December-2020. In order to mitigate the shortfall, SNGPL resorted to closure of CNG stations of Punjab and KPK and Captive Power Plants (Non-zero rated) of Punjab along-with curtailment of RLNG supplies to Power. Power consumed 227 MMCFD as against ADP of 255 MMCFD for the month of December 2020. Since the situation was beyond the control of SNGPL, curtailment was undertaken pursuant to the CCoE decision dated 26.11.2020, per approved Load Management Plan 2020-21.
This year in order to manage the demand-supply gap; SNGPL had to continue suspension of supplies to CNG stations and Captive Power Plants (Non-zero rated) of Punjab. In addition, supply to General Industry was also suspended for one day whereas, Power Division was requested for downwards revision of APPs of GPPs. Upon revision of APPs, GPPs provided revised requirement of 244 MMCFD as against earlier demand of 344 MMCFD for January-2021. Furthermore, the Cabinet in its meeting dated 29.12.2020 approved Updated Winter Load Management Plan 2020-21. As per revised- Winter Load Management Plan, Power Division was to be provided an average of 200 MMCFD as against the ADP of 244 MMCFD for the month of January. Accordingly, SNGPL provided more than 200 MMCFD on average, to Power Sector in January-2021.
RLNG has been diverted to the high priority domestic sector in order to meet the increasing demand of gas during the peak winter months. SSGC in its franchise area of Sindh and Baluchistan has been facing severe shortfall of gas which is due to depleting gas fields and no new major gas discoveries. Indigenous gas supplies have been reduced to around 234 MMCFD since FY 2018-19.
Ministry officials further informed the committee that in order to strike a balance between indigenous gas supply and demand during above mention period, SSGC is retaining RLNG in the system and remaining shortfall after receiving RLNG, SSGCL has implemented the Government’s approved Gas Load Management Plan of 2018 in which domestic and commercial customers are given top priority in the provision of gas followed by other sectors. Whereas General Industries including Captive Power (non export) remain closed for one day weekly in the Sindh Province, CNG sector remain closed for three days weekly in 2018.19 and 2019-20, since the start of supply of RLNG to CNG Sector, SSGC has stopped weekly curtailment except winter months and during Annual Turn Around of gas processing plants/reduction in retention of RLNG. Furthermore, SSGC is also curtailing gas supply to K-Electric, Sindh Nooriabad Power Station and Fauji Fertilizer Bin Qasim Limited (FFBL) only in winter.
SNGPL has ordered maximum RLNG available capacity of 1200 MMCFD. Winter gas Load Management Plan is being prepared which would be presented to the Cabinet for approval further; all out efforts shall be made to ensure maximum supply of gas to different sectors.
Senator Shamin Afridi expressed his reservations regarding gas load shedding in KPK Province. Senator questioned as why there is load-shedding in KPK when province has surplus gas production. Senator Fida Muhammad also weighed in on the situation and lamented the role of SNGPL in distribution of gas supplies between the provinces.
Senator Qurat Ul Ain Marri and Senator Engr. Rukhsana Zuberi also pointed out that Sindh also has surplus gas production and yet province faces gas outages. Senators termed the gas load shedding in Baluchistan, Sindh and KPK as violation of Article 158 of the constitution which says that local areas get precedent over other parts of the country in terms of distribution of natural resources. “This act also goes against the gist of 18th Amendment” Said Senator Rukhsana Zuberi.
Chairman Committee Senator Muhammad Abdul Qadir suggested that cheap natural gas produced locally should be provided to the domestic users and costly imported RLNG should be diverted towards industrial units which can afford such rates.
SNGPL officials present during the meeting refused to accept that there is any gas load shedding in the province of KPK. Ministry officials informed the committee that electricity demand decreases during winters in Pakistan and gas demand surges. Policy is being drafted which would allow domestic users to utilize electricity during the winters for heating purposes at fixed rates.
Senator Rukhsana Zuberi said that there should be awareness campaign for the conservation of energy. People should be apprised of the impending energy crisis. SSGC officials informed that a robust media campaign is being run through print, electronic and social media to raise awareness regarding conservation of energy resources.
Committee members expressed their reservations on the constant absence of Minister for Energy in the committee meeting. Members also staged a walkout in protest against the absence. Protesting members returned to their seats only after assurance from the Chairman Committee that a letter will be written to the Ministry in order to make sure that Minister in charge attends the committee meetings in the future. Committee members declined to go ahead with any future meetings if Minister in Charge is not present.
Ministry officials briefed the committee regarding purchase of last 10 spots cargoes including prices since May, 2021 with month wise break up, its impact on the price of RLNG and the loss, if any, accrued due to the same.
Global RLNG markets are volatile. Everyone has been affected by this. Despite the uncertainty our pricing has been efficient claimed secretary Ministry of Energy. There are 12 cargoes, 9 are through fixed long-term contracts and 3 on the spot buying.
Chairman Committee questioned as to why cannot we book advance shipping in May, April for November December deliveries. This can save lot of money for the exchequer. To which ministry officials replied that for this to happen we have to make 100% advance payments. And there is only two month strip available to secure the future deliveries.
Chairman Committee said that” We are here to help the government and try and save the public money. This committee can help Ministry tie up with Finance Ministry and remove the bureaucratic hurdles for timely processing of import orders”.
Chairman Committee directed make all out efforts to reduce/eliminate losses suffered due to LNG Spot Cargoes and emphasized that prompt steps should be taken to purchase required gas at economical rates.
Chairman Committee further expressed that PPRA rules are effective for normal procurement but for such huge purchases of oil and gas they more of a hindrance towards timely and prompt action. He further suggested that Large customers/firms (Capacity 50 MMBTU and above) should be allowed to purchase gas on their own.
Committee was informed that two new terminals will be installed in Karachi. TAPI gas pipeline project will also help fill the gap of demand and supply.
Senator Rukhsana Zuberi suggested that New Terminals should be ground based. To which OGRA chief replied that installation of land based re-gasification units takes at least 5 for 6 years. New LNG policy is being drafted. Installation of ground based re-gasification units will be made part of that policy.
Chairman Committee directed the ministry officials to provide details of CSR activities undertaken by different companies working in Pakistan. Further consideration of the agenda items was deferred till the next meeting of the committee.
Meeting was attended by Senators, Fida Muhammad, Aon Abbas Bappi, Qurat Ul Ain Marri, Engr, Rukhsana Zuberi, Afnan Ullah Khan, Atta Ur Rehman, Kauda Babar, Shamin Afridi, Officials from Ministry of Energy, Petroleum Division, SSGC, and SNGPL.
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Senate of Pakistan
H.No.7, Cat-II, G-8/2, Islamabad, Pakistan