Govt stares at possible spillover effect of gas shortages on power supplies

LAHORE: Authorities are staring at possible spillover effect of gas shortages as it may spark full-fledged power crisis during upcoming winter season amid soaring prices of Liquefied Natural Gas (LNG) in the global market and scarce imports.

The policy makers as well as consumers get visibly jittery by almost 100 percent surge in crude oil prices, about 600 percent jump in LNG cost and 100 percent in coal value in a year, making imports unviable and hard to find. For instance, the LNG import tender for the month of December, 2021 and January 2022 by Pakistan LNG Ltd (PLL) gets muted response while earlier shipment costs five times higher than the previous year’s level.

Unfortunately, the adverse impact of pricier and scarcer LNG has started to feel in the country even well before setting in winter in the most parts of the country, presenting a gloomy energy outlook for next four months.

Gas utilities have braced themselves for squeezing gas supplies. Sui Southern announced to suspend gas supply to Compressed Natural Gas (CNG) sector while blaming short supply in the system.

As per the curtailment measures in place, SSGC turned off gas supply to CNG stations including RLNG users in Sindh from October 16 to October 25. It is clear that there will be no or very low availability of gas for the transport sector.

The global LNG shortage and price hike means very few loads of gas available for a country like Pakistan that has to meet its more than half of requirement through imports. More worryingly, this share is increasing with every passing day simply keeping in view close to 10 percent depletion in local production.

While peeping into short-term natural gas and power outlook, the harsh possibility of power outages during winter due to short supply of imported fuels including Regasified Liquefied Natural Gas (RLNG) and coal has emerged on the horizon.

Reacting to this notion, a public sector player of national power infrastructure observed that the provision of forecast for the requirements of RLNG is being made. “If there is a shortage of RLNG, then we have the option of going to run Residual Fuel Oil (RFO) power plants.

With the decreased load in early months, so far we don’t see any outages unless there significant shortage of RLNG or RFO,” official added.

“The Pakistan State Oil (PSO) and Sui Northern have the supply forecast and based on that we can see if that is meeting our fuel requirements or not,” he maintained.

However, situation is turning out to be a bit complex. As per discussion with stakeholders, there are delays and gaps in LNG import due to price hike and short supply in the international market, so reliance on RFO would certainly increase, leaving little cushion in managing demand and supply of electricity in the absence of sizeable hydropower share, especially during a month-long canal closure period when outflows from dams are reduced to minimal.

In this backdrop, energy outlook is not so bright for winter months, especially between November 15 to February 15. This become evident to the fact that we don't have RFO stocks to comfortable level that can cater to emerging demand supply scenario. Consequently, there is strong likelihood that gas shortfall is going to have spillover effect on power crisis.

Commenting on this notion, a senior official replied: “Agreed”. However, he added, there are efforts already in place to procure RFO, foreseeing shortage of LNG. “So, if we have the alternate fuel arrangements well in time, we hope that country-wide load-shedding is unlikely to happen.”