ISLAMABAD: The federal government decided on Tuesday not to resort to gas loadshedding for domestic and commercial consumers in Punjab and Khyber Pakhtunkhwa during the current winter season by inducting imported liquefied natural gas (LNG) in the network.

“The gas utilities will be allowed volumetric adjustment and financial impact on cost neutral basis in accordance with the ECC’s decision of 11th May 2018,” said an announcement issued after a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Finance Minister Asad Umar.

Sources said under a “gas banking mechanism” approved by Shahid Khaqan Abbasi-led ECC, about 170-180 million cubic feet per day (mmcfd) of regasified LNG would be injected into the distribution network of the Sui Northern Gas Pipelines Ltd (SNGPL) for three winter months.

Allows tandoors to pay bills on previous rates

An official explained that the impact of the sale of RLNG to domestic and commercial consumers had worked out at about Rs15 billion last year and was adjusted through the gas banking mechanism. This required formal regulatory approval by the Oil and Gas Regulatory Authority (Ogra) to allow the gas utility meet its revenue requirements in its accounts.

The ECC also decided that the recent increase in gas prices will not be applicable for tandoors, and they will continue to pay their gas bills on the previously applicable rates. The decision was taken in view of concerns that the increase in gas prices was resulting in increase in the prices of tandoori roti and naan.

Additional Secretary In charge of Petroleum Division Mian Asad Hayaud Din explained the gas load management requirements from December to February and presented three options.

He said the SNGPL should be asked to inject the LRNG volumes for consumption by domestic and commercial consumers provided Ogra allowed volumetric adjustment and financial impact on cost neutral basis in line with the ECC’s decision of May 11.

Otherwise, given the wider difference in the natural gas sale price for domestic use and the RLNG price, the SNGPL should be provided direct subsidy against injection of RLNG volumes for use by domestic and commercial consumers based on actual RLNG consumption. In the absence of these two options, the SNGPL will have to manage the load of domestic and commercial consumers through varied level of pressure management during off-peak hours.

It was reported that existing gas load management policy allowed top priority to the domestic and commercial sectors, followed by second priority to the power sector and zero-rated industry, third priority to the general industrial, fertiliser and captive power, and fourth priority to the cement including its captive power and fifth was given to the CNG sector.

The SNGPL has reported average gas consumption by domestic and commercial consumers in summer months of 2017 at around 528 mmcfd which increased to 867 mmcfd during winter 2017-18 and created a shortfall of 339 mmcfd. The company resorted to different methods to manage this shortfall which included pressure management during off-peak hours, diversion of 150 mmcfd gas from general industrial consumers to domestic and commercial and injection of RLNG to the tune of 160-170 mmcfd in the system for use by domestic and commercial consumers.

The SNGPL expected the total system shortfall during winter to remain generally unchanged at the last year’s level with minor variation depending on weather conditions and had proposed it be allowed to charge Rs36 per MMBTU higher rate to consumers or provided subsidy or allowed volumetric switching.

Published in Dawn, November 28th, 2018