Given the excessive gas shortfall in the present winters that has pushed the authorities to make some drastic decisions including gas curtailment to the CNG sector, certain industries and gas load shedding to domestic consumers, we met Mr Arif Hameed, Managing Director SNGPL to get his take on the exacerbating scenario that is multiplying the woes of not only the domestic consumers but also of the industrial sector. The problems are indeed troubling and there seems to be no easy way out of the quagmire, so we discussed with Mr Arif, the priorities of SNGPL, the problems being faced and the possible solutions to a worsening situation.
A depleting resource
“Gas in Pakistan is a rapidly depleting resource. The effective utilisation of the natural resource remains to be a priority for us and the government. Unfortunately over the past few decades authorities have failed to realise where their priorities lie. Pakistan is the largest consumer of CNG in the transport sector worldwide, followed by Iran. This obviously poses a serious dilemma for the effective allocation of gas to different sectors of the economy,” Mr Arif explained.
What stands out according to statistics is that 61 per cent of all vehicles in Pakistan run on CNG, whereas only 12.64 per cent of all vehicles in Iran run on the same fuel. Such a discrepancy highlights the enormity of the problem at hand. While talking to Mr Arif regarding the priorities of gas distribution, he said, “Our first priority lies with the domestic consumer, followed by industrial consumers and finally the commercial sector.”
In response to how certain countries across the globe have adopted CNG since it is an environment friendly fuel, he agreed with the impression and said that the benefits of CNG consumption for transportation cannot be ruled out. However he pointed out that one of the reasons for encouraging the use of CNG in the transport sector was to curtail on oil imports that burdened the foreign exchange reserves and the current account.
Implementation of policies
“The situation could have been handled better if the policies that were formulated had been implemented. It was agreed that CNG stations would be given licenses for operation if they were spaced out between five kilometers from each other, however the policy was never adhered to, resulting in a saturation of such outlets. The result was that nearly everyone wanted a CNG station,” he said. While shedding light on the shortage of gas in the country, Mr Arif Hameed said, “In the last one year, there has been 90mmcf increase in demand of gas. We need to understand, that Pakistan is not purely an agrarian economy. The lifeline of the country continue to be the industries as well, and as a result of an increase in demand of gas; the curtailments to the industry, have also adversely affected it. Our focus remains, to find a solution that benefits all the stakeholders.”
SNGPL is catering to more than 4.1 million consumers with one of the largest distribution and transmission network connecting areas from North and Central Pakistan through an extensive network that runs the length of Punjab, Khyber Pakhtukhwa and Azad Kashmir. According to the company website, SNGPL has 3,929,842 consumers in Commercial, Domestic, General Industry, Fertiliser, and Power and Cement Sectors.
Supply constraints
“On our part we are faced with severe supply constraints. There has been expansion without keeping in mind consideration of supply inadequacies. Further inefficiency of appliances is leading to wastage of an important resource. Previously the SNGPL used to authorize products with an official seal of SNGPL on all gas products, however the policy is no longer in effect. Therefore, keeping a check on all the substandard equipment that wastes gas has become a hard task,” Arif Hameed explained. As far as infrastructural problems are concerned, the SNGPL MD pointed out that the pipelines in many cities are decades old therefore there are leakages. The cost of replacement of this infrastructure is great not only in terms of the intangibles, he said, like inconvenience caused to the masses but also in terms of uprooting major roads of cities which is used by a large number of vehicles for daily commutation. He said that they use laser radars to pinpoint leakages deep within the ground and based on the information try to address the problem as efficiently as possible. Moreover with an amount of Rs720m 1300 CNG stations have been installed with state of the art systems to ensure that gas theft is minimised.
While explaining the possible solutions for addressing the gas quagmire, the MD said that the shortfall could be offset through a plethora of alternatives. These include the use of Liquefied Natural Gas, around 400mcbf can be extracted indigenously to cover the shortfall while 500mcbf will be made available once the Iran Pakistan gas Project is operational. For LNG 3 terminals have been made where two local firms and one foreign firm have been given licenses. It is pertinent to mention that the Turkish firm that got the license for the project demanded the government to purchase gas if they fail to sell it to local consumers. Mr Arif Hameed, while speaking about the same issue said that the Turkish firm has failed to pick up consumers and it is not under the domain of SNGPL to do so on the Turkish firms behalf.
Addressing concerns
To a question regarding the supply of gas to the industrial sector for 9 months of the year SNGPL MD, Arif Hameed said that those fertiliser companies that were contracted before 1984 have a 12 month supply agreement while those contracted after 1984 have a 9 month contract. Similarly, those CNG stations that were contracted before march 2008 have a 12 month supply contract while those contracted after march 2008 have a 9 month supply contract.
Briefing us about the gas load management plan, which was discussed in the Economic Coordination Committee Mr Arif Hameed clarified that the domain of SNGPL is to formulate guidelines whereas the final decision is taken by the ECC and the Cabinet. While talking about the scenario where the IP project does not materialize, Mr Arif Hameed said that in that case, we will have to rely more on LNG and LPG. He explained that the prices of both the fuels have risen because countries like Japan and India have signed long term contracts to cater to their energy needs.
When asked about the coal gasification project Mr Arif Hameed said that it is a very good project one that promises to address the energy needs of the country, however the costs of the project are very high. He explained that earlier, SNGPL was quite interested in the project however it is now a provincial project therefore it does not fall under the domain of the company.
Profile
Mr Arif Hameed joined SNGPL in 1978. He was a mechanical engineer initially in the distribution department and worked his way up the ladder as GM sales. He said he has worked in almost every department of the company from purchase to legal administration. ‘My bond with the company is one that cannot be explained in mere words. I feel genuinely disturbed that this company has had to face a plethora of problems that have adversely affected the functioning. In my work here as the Managing Director I have made all possible efforts to improve upon the discipline in the company.”
Given the problematic gas situation in the country, with the ordinary consumer having to face the brunt of gas loadshedding, CNG curtailment and the industry struggling, we felt that the SNGPL needs to be taken to task however after talking to Mr Arif Hameed, we were forced to revisit our pessimism. Mr Arif Hameed was very straightforward and acknowledged the grievances we had however, he said under his leadership SNGPL has made all possible efforts to improve efficiency of the company. What needs to be understood is that the company is merely responsible for transmission and distribution while the other decisions fall under the domain of the respective Ministry and the cabinet. The company has to follow directives issued from the relevant government departments.
He also acknowledged the presence of political pressure something he termed as being part of the package however he said that he believed in promoting the culture of merit and not succumbing to any pressure from any sources. He praised Dr Asim Hussain for his accommodating approach and professional attitude that is beneficial in supporting independent decision making and promoting merit.
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