The new government’s failure to import adequate quantities of Liquefied Natural Gas (LNG) caused an artificial gas and electricity crisis this winter in the country, according to sources.
LNG is used as a fuel for several power plants in the country as well as provide gas for domestic use and CNG for vehicles. For power plants, LNG has been used as a much more effective substitute for furnace oil which is more costly and less efficient.
Due to some poor decision making from the Petroleum Ministry and SNGPL, the use of RLNG (Regasified LNG) has constantly decreased during the first four months of the new government while the use of furnace oil increased. This has caused billions in losses as while also resulting in a gas crisis as well as loadshedding in many areas which does usually occur in winter.
PM Imran Khan had earlier sacked the heads of SNGPL and SSGC after an inquiry company blamed them for the power and gas crisis. However, the Petroleum Minister is ultimately responsible for ordering the import of LNG and poor leadership could be blamed for causing the crisis.
According to an article from The Nation, from September to November this year, the SNGPL had enough RLNG in their system as the previous government had ordered the requisite quantities. However, the government failed to order enough LNG for December resulting in a shortage of around 3,600MW electricity. The LNG demand increases during December and January, which needed to be covered, but it was not causing the crisis.
Official documents from the SNGPL in November suggest that it did not have enough RLNG meet the gas and power needs of the country. The letters also suggests fulfilling RLNG demand immediately to ensure no crisis occurs, and that any financial losses resulting from non or underutilisation of RLNG will be the responsibility of the power division.
The SNGPL had clearly warned that less off-take of RLNG by power sector may have grave effects on the sustainability of LNG supply chain. This had been clearly communicated in letters and was reiterated during the November letter to the authorities. However, the government, in particular the petroleum ministry and power division failed to take timely action
The use of furnace oil based electricity generation in December was increased to 930.78 GWh or 12.06% from 5.75 GWh or 0.08% in November. The total cost of the RFO based electricity during December was Rs 14.19 billion or 15.25 per unit.
Meanwhile, RLNG use was reduced from 17.23% in November to 12.06% in December. The energy generated from RLNG was 930.78 GWh and it was added with the cost of Rs 10.1167 per unit.
In a hearing last week, the National Electric Power Regulatory Authority (Nepra) had also brought up the use of expensive furnace oil for power generation instead of RLNG and the losses caused to the national exchequer.