CPPs gas demand falls by up to 80%, NA told

ISLAMABAD: The Petroleum Division told the National Assembly that gas consumption by industry-Captive Power Plants (CPPs) has decreased by around 80 per cent in SNGPL’s system and 43 per cent in SSGCL’s system. It warned that a further reduction is expected, which may lead to surplus RLNG and add to the circular debt.

In a written reply in the National Assembly to a question of Ali Muhammad, Minister of State Ali Pervez Malik told the National Assembly that reduction is around 216 MMCFD owing to CPPs gas price increase and imposition of levy, while further reduction in consumption is expected which may result in surplus RLNG due to transition of CPPs to national grid.

It was told to the National Assembly that the surplus RLNG will have impact on circular debt, the number of which may vary.

Currently on an average, 10 LNG cargoes per month are being imported mainly for supplying RLNG to SNGPL under three different LNG long-term sale purchase contracts on take or pay basis.

PSO-Qatar 2016 contract: 5 cargoes per month for 15 years (G2G)

PSO-Qatar 2021 contract: 4 cargoes per month for 10 years (G2G)

PLL-Eni 2017 contract: 1 cargo per month through PPRA compliant (B2B) basis for 15 Years.

In order to mitigate the surplus LNG issue, PSO has exercised the option of Annual Downward Flexibility and has deferred 5 cargoes (PSO-Qatar) for year 2025.

As per Sale Purchase Agreement (SPA), PSO is allowed to defer maximum 10 cargoes throughout contract period, out of which 5 cargoes have been deferred.

Since Qatar Energy contracts signed under G2G arrangements are on take or pay basis, therefore, matter is being considered to be taken up diplomatically to explore various possibilities to mitigate the surplus situation.

In addition in order to mitigate surplus LNG Cargoes in country, 11 cargoes from PLL-Eni Contract have also been diverted outside Pakistan for year 2025.

The ministry has carried out various exercises / taken different measures in collaboration with customers of both the Terminals (SSGC for T1, PLL for T2) to improve efficiency. Each terminal’s cargo handling capacity is set at six cargoes per month. Consequently, Terminal 1 is fully utilised, handling six cargoes, while the remaining cargoes are processed at Terminal 2.

It is important to note that due to limitations in the LNG cargo berthing capacity at the LNG Terminals, it is not economically and operationally viable to consolidate all LNG imports to a single terminal.

The government may not revisit the recent price hike primarily due to binding commitments made with international financial institutions, which have conditioned financial support on the implementation of market-based energy pricing and the phasing out of subsidies.

These measures are aimed at ensuring fiscal discipline, reducing country’s overall circular debt and promoting energy efficiency.