Likely gas supply cut in winter irks owners of CNG stations

[LahoreEstate]

Sunday, September 20, 2009
By Saad Hasan

KARACHI: The owners of compressed natural gas (CNG) stations have taken a strong exception to reports that the government intends to switch off gas supply for CNG to meet burgeoning domestic and power sector requirements in coming winter.

Malik Khuda Bux, the Chairman of CNG Station Owners Association, told a press conference on Saturday that news reports and television interviews of gas industry officials have created a lot of scare among its members who had bitter memories of last year fresh in their minds.

“These reports about disconnecting gas supply to our stations and a probable increase in gas tariff have created a lot of confusion,” he said, complaining that no senior government official is willing to speak to the association.

“Every time we call government officials, they ask us to wait for a final decision,” he said without taking any names, “but no one is certain what will happen.”

Pakistan, faced with a severe energy crisis, has been cutting back on gas supplies to CNG filling stations, which are not considered part of a priority industry. Gas is the most consumed fuel in the country and an emerging shortfall pushed the government to shut down some CNG stations last November to January.

Bux said a plan could be worked out with the government, which could ensure uninterrupted gas supply to priority areas. “There are a number of solutions available. We can shut down the stations for 12 hours if need be.”

He insisted there was no real shortfall of gas in the country and the demand jumped only in winters because of increase in use of heaters and geysers, especially in northern parts of the country.

“We have invested billions of rupees to set up 3,000 CNG stations which have made Pakistan the largest user of this fuel in automobiles,” he said, adding that the industry should not be ignored in formulating key policies. He said that CNG stations consume just six per cent of gas produced in the country.

But Pakistan’s gas reserves are fast depleting. According to some estimates, the shortfall has already crossed 800 million cubic feet per day (MMCFD) against total production of 3900MMCFD.

Even the thermal power plants in Punjab find it difficult to get gas. As a consequence they are being run on expensive fuel oil. Textile industry is the biggest victim of gas load shedding in winters.

A few days back the managing director of Sui Northern Gas Pipelines Limited (SNGPL) said that gas supply to some sectors including CNG might be cut in coming months to manage the shortfall. In last few decades gas consumption has increased substantially while exploration and production companies have failed to hit any major discovery domestically.

Since it was decided to allow use of CNG in cars ten years back, the CNG stations have popped up across the country, raising many eyebrows.

Energy industry people say allowing use of CNG, which is priced well below the other competing fuel, petrol, reflects short sightedness of the policy makers. Price of gas is highly subsidized for domestic and fertilizer consumers as well when compared with its imported cost.

Now that it is imperative to import gas, government has decided to use the imported gas for power production in place of fuel oil while retaining domestic supplies for industry and domestic consumers.

http://thenews.com.pk/daily_detail.asp?id=199332