Thursday December 08, 2022

Govt on tightrope over diversion of costly RLNG to domestic sector

In the last four winter seasons, LNG of Rs174 billion was injected into the domestic sector

October 26, 2022
—File Photo
—File Photo

ISLAMABAD: Keeping in view the backlash from the masses from the impending huge gas deficit, the government’s top mandarins are in a fix on what quantity of costly imported RLNG should be diverted to the domestic sector in the winter season. In the last four winters, Rs108 billion imported product was injected into the domestic sector and the said cost had not yet been recovered.

“The country’s gas sector is already soaked in mammoth circular debt of Rs1,500 bn owing to which it has become unsustainable like the power sector facing Rs2,500 billion circular debt. And during this winter, the government is inclined to inject LNG of 250-350mmcfd into the domestic sector to cater to the energy needs of the domestic sector. This will cost the government another Rs110 billion,” a senior official of the Energy Ministry told The News.

In the last four winter seasons, LNG of Rs174 billion was injected into the domestic sector. Out of this, government paid Rs66 billion to PLL (Pakistan LNG Limited) to lay off its liabilities with the remaining amount of Rs108 billion. “Still we have Rs19 billion to finance the subsidy, which is much less if the government diverts RLNG to the domestic sector during the coming winter season.”

To this effect, the Petroleum Division is in touch with the Finance Ministry for finalisation of more subsidies to pay the cost of LNG not recovered so far. The cost of LNG the domestic sector uses in the winter season cannot be charged from consumers as RLNG is a ring-fenced commodity.

The domestic sector is charged only for the sale of system gas (local natural gas). Unless the weighted average cost of gas, after blending of natural gas and imported RLNG, is implemented, the cost of RLNG cannot be recovered from the domestic gas consumers.

The authorities in gas companies have worked out gas deficit of over 1-1.2 BCFD (Billion Cubic Feet Par Day) till the peak winter month of January. The gas will be closed down to the non-export industry, the CNG sector. The current gas supply to the export sector would be halved, and more importantly, the present supply of RLNG to the power sector would be reduced by 40-50 percent.

However, the government, even after diversion of 250-350mmcfd RLNG to domestic sector, will ensure gas to domestic customers three times for cooking purposes as the piped gas deficit is huge.

Both the gas utilities – Sui Northern and Sui Southern – will also import LPG of 20,000 metric tons on daily basis for the masses with a price of over Rs2,300 per cylinder apart from charging Rs7,000 one-time cost of the cylinder.

The government, the official said, has planned to generate more electricity of 3,960-4,000MW from coal in the winter season with more focus on nuclear electricity production to meet the electricity demand of 12,000-13,000 MWs in the country. Sometime in the winter season, the demand for electricity will reach 9,000 MWs.