RAHIM YAR KHAN: Two million new gas connections will be given to consumers by June 2018, Prime Minister Shahid Khaqan Abbasi said on Saturday while inaugurating a re-gasified liquefied natural gas (RLNG) pumping station near Bhong.

The project costing Rs65 billion is a joint venture of Sui Southern Gas Company Ltd (SSGCL) and Sui Northern Gas Pipelines Ltd (SNGPL).

Of the 1,469-kilometre-long gas pipeline, 425km will be mandated by SSGCL and 1,044km by SNGPL. After its completion, the volume of imported gas available for use will double from 1,200 million cubic feet per day (mmcfd) to 2,400mmcfd.

Calling it the first project of this scale in the country’s history, Mr Abbasi expressed optimism that the pipeline will end the energy-related troubles of Khyber Pakhtunkhwa and Punjab.

New pipeline to help end energy woes of Punjab, KP

On Friday, the Economic Coordination Committee (ECC) of the cabinet approved the financing plan for the third LNG pipeline running to Rs175bn, which will be met through commercial borrowing, Gas Infrastructure Development Cess (GIDC) and the resources of the two gas distribution companies.

Both provinces that will be served by the pipelines meet their gas requirements from SNGPL. Years of crippling shortages of the vital fuel forced consumers to resort to either organic fuels or liquefied petroleum gas (LPG) to meet their cooking and heating needs in cold winter months. Those shortages were addressed for the first time this winter when the second LNG terminal was finally inaugurated.

SNGPL has a backlog of 2.4m pending connections, the managing director of the company recently told Dawn. It has 5.5m domestic consumers, 55,000 commercial and 7,000 industrial. Its peak winter requirement, he said, was between 2,500mmcfd and 2,600mmcfd. A shortfall of up to 300mmcfd persisted until recently when the second LNG terminal scaled up its capacity to its full 600mmcfd.

With both terminals running at full capacity, the company can receive just enough gas to meet its winter requirements. Figures on where peak demand will go once the new connections have been issued are not available. But new shortfalls will undoubtedly emerge at that time if more gas is not added to the system.

Pakistan is undertaking a massive gas expansion plan as its domestic reserves enter into decline. In September 2017, the Yunus Brothers Group and the Sapphire Group of Companies announced plans to set up a third LNG terminal at Port Qasim, with operations to commence by early 2019 contingent on timely approvals. That terminal will have a capacity of 800mmcfd, larger than both terminals that are currently operating.

Port Qasim is eyeing plans for a total of six LNG terminals, turning itself into what its chairman recently called “an LNG hub” in the region. Expressions of interest from various business groups are already active and, once completed, total LNG imports handled at the port could rise to 3,600mmcfd.

Imported gas is critical to the government’s plans to meet rising future demand as domestic reserves fall at an accelerating pace. However, the plan still has a few critical areas to bridge before a smooth transition can be made.

One is the trouble that terminal operators might have finding bulk buyers for their imported cargo given that the government does not intend to remain the buyer for all of them. The second is pricing because imported gas is more than twice the cost of domestic gas, which is heavily subsidised. Since gas meets around half of the primary fuel needs of the economy, the transition to the higher-cost fuel could place a burden on industries that rely critically on it, such as fertiliser, auto, textile and cement.

Published in Dawn, January 7th, 2018