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Wednesday December 08, 2021

Govt comes under fire in Senate over gas crisis

Hammad Azhar says the government had a plan to supply uninterrupted gas to domestic consumers three times a day for cooking only

November 13, 2021

ISLAMABAD: The government and the opposition in the Senate on Friday unleashed a barrage of allegations against each other for the piling up of massive loans, unprecedented devaluation of rupee and deepening energy crisis.

Responding to a calling attention notice, moved by PPP parliamentary leader in the House and another PPP Senator Salim Mandviwalla, Minister for Energy Hammad Azhar said the government had a plan to supply uninterrupted gas to domestic consumers three times a day for cooking only during winter in view of the gas shortage in the country.

Senator Sherry questioned the silence of Ogra and NAB with regard to what she called the government's negligence towards the LNG import fiasco. The minister explained that there will be uninterrupted supply of gas at the time of breakfast, lunch and dinner, rejecting reports and claim of the opposition that the government had decided to provide commodity to domestic users only three days a week through December to March to minimise gas shortages.

He said that Pakistan Tehreek-e-Insaf (PTI) government will be doing this for the first time. He put aside the claim of the opposition that the country’s gas crisis was linked with the import of LNG. "We are importing the LNG to our capacity. The problem is that the country's domestic gas network is depleting due to an increase in number of residential gas users”.

The minister praised the last PPP government for clamping a moratorium on new gas connections in 2011 but noted the Pakistan Muslim League-Nawaz government lifted the ban and new domestic connections in large number were given.

About the government’s efforts to minimise gas shortages, he said talks with Russia on a gas pipeline project were moving forward. The government was unable to pursue the Iran-Pakistan Gas Pipeline project because of international sanctions. He said the government has not increased gas prices since 2019, dismissing the claim of the opposition that the Centre was using the gas allocated for Sindh and said the province was using 80 percent of the commodity out of the total gas being explored there.

Speaking on her calling attention notice, Sherry Rehman regretted the ongoing crisis in gas supply to consumers, both domestic and commercial, and the crippling deficits, spiralling prices and unconstitutional distribution of gas to the provinces had reached unprecedented levels.

Hiding behind one false talking point of international gas prices and energy shortages, in drawing comparisons to countries with much stronger currencies, higher per capita incomes and purchasing power, she alleged the government continues to maintain its indefensible position on mismanagement of the gas sector and its iniquitous distribution in Pakistan, yet shows us no plan for overcoming the crisis as a harsh winter looms ahead.

“None has answered the basic question as to why the government could not manage the purchase of LNG in the summer at 1/3 the rates. The price of gas today is also naturally related to the LNG fiasco and its shortage. Currently, Pakistan is facing an estimated shortfall of 2,200mmcfd while the prices have become unaffordable for people,” she contended.

Senator Sherry said that obviously, the dollar exchange rate has an impact on this as the rupee has dropped to a historic low of Rs176 against the USD. The government doesn’t seem to have a plan to tackle this crisis as it has taken an ad hoc approach that has led the power sector into a terrible paralysis.

“The government purchased LNG cargoes at the historic high price of $30.6 per million British thermal units (mmbtu) now when it was being sold at $13 per mmbtu in the summer. They did not purchase or book cargoes when all other countries were doing it in the summer at much lower rates. Even in October, they purchased LNG cargoes at a record price of $20.29 per mmbtu,” she said.

On the recent news of gas loadshedding, Sherry said, “Gas Load Management Plan for winter 2021-22 includes providing gas to the residential sector only three times a day with bare minimum supply of LNG during December-March. How will people survive this winter season in these conditions? Comparing our situation with other countries like India and Bangladesh is absurd when their INR and BGT are higher than ours: our food inflation rate of 13-14pc is way more than theirs. Our current account balance is in deficit while reduction in disposable incomes has made it impossible to buy daily food staples like wheat and sugar.”

“Then there is the issue of iniquitous supply. Sindh is the largest contributor to nationwide gas production, producing 65 to 70pc of it but itself is deprived of it and then the government complains that Sindh does not cooperate. The shortage in gas supply has hit Sindh particularly hard. Article 158 of the Constitution clearly states that the province, in which a wellhead of natural gas is situated, shall have precedence over other parts of Pakistan in meeting the requirements from the well-head, subject to the commitments and obligations as on the commencing day,” she said.

She continued that not only is the government clearly in violation of the Constitution by depriving Sindh of its due share, it is constantly messaging its ill intent of lowering supplies to the province that pays the highest business taxes and sends out high exports.

The gas crisis in Sindh will hit not only jobs but also revenue generation. Karachi’s textile industry contributes 52pc share in the national textile exports but is now suffering because of the federal government’s incompetence.

PPP Senator Mandviwalla said the Iran-Pakistan Gas Pipeline Project was ‘the key to resolving energy crisis in the country’. He asked the government to reconsider the gas pipeline project and engage Iran on this count, as Iran had built the pipeline up to its border with Pakistan. However, he also urged that the government should also materialise the North South Gas Pipeline project with Russia to meet its energy needs. He said the country will continue to face gas crisis as long as the project is not materialised. He alleged that the PTI government was importing LNG at higher rates than the last PML-N government, though it blamed the last government for wrong LNG contracts and former prime minister Shahid Khaqan Abbasi was sent behind the bars on such charges.

The government also came under fire for setting new records of obtaining loans, whereas the government held the previous rulers responsible for economic woes. Conceding that the external debt had reached close to Rs40 trillion from Rs25 trillion over the last three years, Minister of State for Parliamentary Affairs Ali Muhammad Khan said the external debts stood at Rs six trillion in 2008, which was increased to Rs25 trillion by the previous PPP and PML-N governments.

Responding to JI Senator Mushtaq Ahmad, the minister told the House that like the previous governments, the incumbent government also had not sought permission from the Parliament as per the Fiscal Responsibility and Debt Limitation Act despite the debt-to-GDP ratio increased well over 80 per cent. He said the total public debt increased by Rs14.9 trillion during the last three years, out of which 50pc (Rs7.46 trillion) was due to interest payments. He said Rs four trillion were used for cash buffer while devaluation of rupee added another Rs three trillion to the debt burden.

The minister justified rupee devaluation and said former finance minister Ishaq Dar had artificially maintained the dollar rate, which had been made market based with a free flow rate, whose policy was reversed by Miftah Ismael during the last year of PML-N in power.

He said the government was taking necessary steps for ensuring fiscal discipline and consolidation, stabilizing the economy and accelerating growth. He added the government debt was on a firm downward trajectory, where Debt-to-GDP ratio has decreased by 4pc during FY2020-21 and government expects that this ratio will decrease further by 2-3pc during ongoing fiscal year. He said over the medium-term, the government’s objective is to ensure gradual reduction in fiscal deficit, which would subsequently reduce the country’s reliance on additional debt. He claimed the government had not obtained loans from the SBP unlike the previous regimes.