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Thursday March 28, 2024

Costly RLNG being provided to domestic consumers of Punjab

By Khalid Mustafa
January 19, 2018

ISLAMABAD: In a major disclosure, the highly costly imported fuel, Re-gasified Liquefied Natural Gas (RLNG) of 200-300 mmcfd with price of Rs1,200 per MMBTU is being provided to the domestic consumers of Punjab from the month of December apparently to give solace to the consumers in severe winter season.

The unusual development seems political to keep the consumers away from staging the demonstration across the province on account of increase in demand and no increase in system gas. However, the decision will trigger to another kind of circular debt in the gas sector as the domestic gas tariff is very low so it is not possible to charge them the RLNG price, but the government will have to either extend the subsidy or let the circular debt emerge in the system, reveals the date of RLNG showing the supply to the various sectors of economy available with The News which also indicates that the 200-300 mmcfd RLNG is being injected to the domestic sector.

The top official privy to the development confided to The News that in summer season overselling of gas is taken place and in winter season underselling takes place and this is how a gas reserves bank has been established. He said that in summer season, overselling means overbilling that takes place and the amount generated out of overselling is used to subsidise the RLNG given to the domestic sector. The Adviser to APTMA Shahid Sattar also confirmed saying that in last summer the Sui Northern went for overbilling of RLNG for textile sector as the gas company provided 600 mmcfd gas but charged with the price of 900 mmcfd. He said that the industry is paying the cost of overselling of gas which is sheer injustice to industry.

The official in the Petroleum Division also explained that system gas availability for Punjab and KP stands at 1.4 billion cubic feet per day, out of which, for Punjab 750-800 mmcfd gas is available whereas the demand of Punjab alone in winter season stands at 1.2 bcfd which is being fulfilled through RLNG.

According to the latest data, RLNG of 1.1 bcfd is being imported out of which 300 mmcfd is being injected to industry, 50 mmcfd to CNG and almost 450 mmcfd to power sector and the remaining RLNG is being provided to the domestic sector.

However, Managing Director of Sui Northern Amjad Latif, when contacted, admitted that the RLNG is currently being injected to the domestic sector but it will be having no financial repercussions on the domestic gas consumers as they will not pay more for using the costly gas as in the winter season. He went on to say when the electricity demand increases manifold in summer peak season, the gas intake to thermal power houses will increase as the gas demand in domestic sector in summer season remarkably decreases. The 28 percent system gas to the industrial sector is also given in the summer season.

So, there will be no effect on domestic consumers financially by using the RLNG in winter season, Amjad Latif argued. He said that it is all about the gas load management in winter season. He admitted that there is a gas reserve bank which is being used as tool to manage the gas distribution both in summer and winter season. He explained that in a country like Canada, the old depleted gas wells are used as gas reservoirs in summer, as the surplus gas in summer is injected in the said depleted wells from where the gas is used for winter season, but that kind of facility our country doesn’t have. “However, we have established gas reserves bank which is an innovative idea and is being used for gas load management,” Latif reiterated.

However, he again claimed saying that the RLNG supply to domestic sector will have no financial impact on domestic consumers, as the bulk consumers that include power, industrial, fertilizer and CNG sector will ultimately pay the RLNG cost.

“So far Sui Northern has in its system the gas supply of 2.5 bcf per day out of which 1.1 bcfd is RLNG and 1.4 bcfd system gas. The 28 percent gas which is used by industrial sector in summer season is also currently being used by domestic consumers.”

The Ogra chairperson Ms Uzma Adil, when contacted, also confirmed that the RLNG is currently being given to the domestic sector, but it is all about gas load management as the quantum of RLNG the domestic sector will use in the winter season and the same amount of system gas will be provided to the RLNG using entities including the power sector during the summer peak demand of electricity. “This means there will be no financial impact on domestic consumers for using the RLNG of which price is ring fenced,” she asserted.