Reduction in gas supply to CNG stations on anvil

While the National Accountability Bureau (NAB) has taken notice of supply of natural gas to inefficient captive power plants (CPPs), the Ministry of Petroleum and Natural Resources is considering further reducing gas supply to the transport sector at the request of the industrial sector.

A call from stopping gas supply to compressed natural gas (CNG) stations has come from major stakeholders in the industrial sector. The sources said the proposal for stopping gas supply to CNG stations was strongly supported by a representative of the Fatima Fertiliser, who questioned why the fertiliser sector was not receiving its due share of gas supplies when it was on the priority list, formulated by formulated by the authorities for gas load management. Under this plan, the fertiliser industry is the most important sector after the domestic and commercial and power sectors.

A government official told private media on Friday that a crucial meeting of all major stakeholders of the gas sector was being convened by the minister for petroleum and natural resources in Lahore to consider further reducing supply of CNG to dispensing stations.

Representatives of the All Pakistan Textile Mills Association, the All Pakistan Textile Processing Mills Association, the Fertiliser Manufacturers Pakistan Advisory Council, the Pakistan Hosiery Association and the All Pakistan CNG Association have been invited to the meeting.

For over a year now, most fertiliser plants have been running at sub-optimal levels because of gas shortage, resulting in losses to these companies. Apart from the fertiliser industry, the industrial sector, particularly the textile sector, has now moved a fresh request to stop gas supply to the CNG sector because it is last on the priority list.

The Ministry for Water and Power, NAB and the National Electric Power Regulatory Authority (NEPRA) are on the same page that maximum gas should be supplied to the major power plants in order to reduce cost of electricity generation, decrease duration of loadshedding and cut circular debt.

But a bone of contention among various gas consumers has been the rapid changes made in the priority order by the petroleum ministry in violation of the decisions of the Economic Coordination Committee (ECC) of the federal cabinet.

NAB has insisted that power plants of WAPDA and big independent producers should get priority over the CPPs not only on the basis of the load-management formula but also because of their cheaper production cost and better efficiency.

Under the gas supply criteria of gas utilities, natural gas should not be provided to CPPs having less than 50 per cent efficiency.

At a meeting early this week, the NAB chairman strongly criticised gas companies and the petroleum ministry for allowing provision of gas to the CPPs even though most of them were running at less than 20 per cent efficiency and thus wasting an invaluable resource at a time when more productive gas consumers were facing shortages.

In few cases, the CPPs are producing electricity without licence and even selling electricity to distribution companies of WAPDA at higher rates without consuming power at their own industrial units while efficient power plants having over 60 per cent efficiency have been closed down due to non-provision of natural gas.