The week in focus

Acute gas shortages have started taking a heavy toll on industry in Punjab with no immediate solution in sight.

Acute gas shortages have started taking a heavy toll on industry in Punjab this winter as well with no immediate solution in sight.

Among different industries, textile mills are bearing the brunt of the shortage and have sought swift action from the government. Industry representatives are meeting Prime Minister Yousaf Raza Gilani on Monday to discuss measures to tackle the crisis. Tempers are boiling as, according to an industry official, 40 per cent of industries have been closed due to suspension of gas supply.

On December 7, the Economic Coordination Committee (ECC) had approved a gas load management plan envisaging outages for two days a week for industries in Punjab. However, traders and industrialists claim that besides the two-day suspension, gas pressure remains so low in the remaining days that it becomes impossible to continue production.

Sui Northern Gas Pipelines General Manager Retail and Sales Rehan Nawaz said Punjab needs 600 million cubic feet of gas per day (mmcfd) but at present only 225 mmcfd is available. “Gas supply from the fields has not dropped but demand has increased tremendously because of heavy consumption for heating purposes in winter. Actually, supply has improved 30 to 40 mmcfd over the last two months due to new fields coming on stream.”

Industry crippled

“The government has failed to realise the gravity of the situation and the industry will collapse with suspension of gas supplies for 90 days (December to February),” said a top textile miller.

Seeking priority for the industry, he stressed that gas shortage was only 15 per cent of normal supplies, but said the industry was being forced to bear the major impact. “Export orders for Christmas and New Year have been affected and importers are switching to other countries.”

Pakistan Industrial and Traders Association Front Chairman Irfan Qaiser Shaikh said Punjab industries have suffered losses of Rs40 billion in the wake of disruption in gas supply, while mark-up on loans is also piling up. “Forty per cent of industries have been shut and a large number of daily-wagers have lost their livelihood.”

The industry has suggested to the government that fertiliser manufacturers be brought under the gas load management mechanism, which will result in uninterrupted supply to all industries and only three days of outages a month will be required.

Moreover, it has underlined the need for importing liquefied natural gas (LNG) – a recognised solution to the shortage of gas all over the world. According to Shaikh, 30 per cent of industries run on LNG in India.

Immediate solutions

BMA Capital Head of Equity Research Hamad Aslam endorsed the view that LNG import is an immediate solution to the acute gas shortage, saying the project would take only six to eight months to take off.

He said the gap between gas demand and supply currently stands between five and seven per cent but it will widen to 15 to 20 per cent over the next 10 years, adding aggressive exploration is needed but the Oil and Gas Development Company and Pakistan Petroleum Limited, two major explorers, have done satisfactory work.

Aslam said Pakistan has one of the largest coal reserves which should be extracted and consumed for power generation. At present, only five per cent of power is produced through coal, while in India 60 per cent of electricity is generated through this source.

Pakistan has signed two framework agreements for gas import through pipelines from Iran and Turkmenistan, but these are long-term projects which will take years to complete.

the writer is incharge Business desk for the Express tribune and can be contacted at [e-mail]

Published in The Express Tribune, December 20^th, 2010.