Gas shortfall
It is the peak of winter and, as usual, there is the traditional gas shortage. Just like the summer peak time is celebrated with unannounced electricity load shedding. The drop in temperature has brought a total of 600 million metric cubic feet a day (MMCFD) gas shortfall, forcing gas companies – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – to limit the supply to sectors only to meet domestic consumer demands. Other than industries, Compressed Natural Gas sector will also face supply suspension. Pakistan is perhaps the only gas-starved country where domestic consumers are prioritised at the cost of industry. Gas exploration has made small strides on land and offshore, whereas gas import projects like the Iran-Pakistan Gas Pipeline do not attract the attention of the government, perhaps due to Arab-Iran rivalry. Both gas companies, the SNGPL and the SSGC, have failed to fix their losses, thanks to financial mismanagement, gas theft and leakages. According to company officials, most gas thieving industry and households are in Khyber Pakhtunkhwa and Punjab. An estimated 200MMCFD theft occurs in the areas close to gas fields.
The government, most of the time, relies on increasing prices to fix losses. Right now, both gas companies are suffering a loss of Rs50-60 billion per annum. Recently, the government distanced itself from rumoured increase in gas prices by 200 percent. The increase, however, is imminent, no matter how the public reacts to it as losses of gas companies are rising. In September 2018, when the Economic Coordination Committee of the cabinet approved a 46 percent increase in gas rates, Prime Minister Imran Khan intervened and ordered a probe into the action in February this year after public outcry. Later, a fresh dose of 191 per cent hike in gas prices was slapped on the consumers, to be enforced from July 1. Of course, difficult times are ahead for both the government and the public. The government may try to find some face-saving in setting a low slab to shield a good portion of domestic consumers from the fresh onslaught but industry’s and service sector’s dependence on natural gas is likely to set in a fresh wave of inflation. Only structural reforms in gas companies can bring about a change in the sector.
Politicising ANF