CCE meeting: PM rejects fact-finding report on gas crisis

Premier asks Petroleum Division secretary to identify official, lobbies at work


Zafar Bhutta December 27, 2018
PM Imran Khan. PHOTO: PTI

ISLAMABAD: Prime Minister Imran Khan on Wednesday rejected a fact-finding report on a gas crisis that hit the country in mid-December and directed the Petroleum Division to reinitiate the investigation to identify the officials and lobbies behind that sudden secession of gas supply in the country.

The fact-finding report on gas crisis was discussed in a meeting of the Cabinet Committee on Energy (CCE) chaired by the premier. The PM expressing dissatisfaction over the report asked the Petroleum Division secretary to reinitiate the probe. He directed him to submit the report by December 28.

According to sources, the probe committee – headed by the Oil and Gas Regulatory Authority (Orga) Chairperson Uzma Adil – that compiled the report had not identified the officials and lobbies involved.

Earlier, Minister for Petroleum Division Ghulam Sarwar Khan had held meeting with managing directors of the state-owned gas utilities - the SNGPL and the SSGC – to find out causes of the gas crisis.

Officials said the major beneficiary of this crisis was the oil mafia which succeeded in promoting the use of imported furnace oil in power plants in violation of the merit order. Local production of furnace oil was 10,000 tons per day and total stocks in the country had exceeded 500,000 tons.

Domestic refineries had limited storage capacity and these refineries cut the production that forced gas exploration companies to reduce their production, resulting in reduction of gas supply to gas utilities.

Officials said the Pakistan State Oil (PSO) had also imported furnace oil in bulk which also resulted in piling up of furnace oil stock in the country.  The state run oil marketing company imported 140,000 tons of furnace oil in the month of October.

They said role of the DG Oil and the Oil Companies Advisory Committee (OCAC) was also important in this entire import as they had decided that such a huge quantity of furnace oil be imported while ignoring the locally produced furnace oil.

The role of the Pakistan LNG Limited (PLL) managing director and the LNG director general was also important in the entire episode.  The PLL has short term and long term LNG supply contracts with Gunvor and Eni respectively.

The PLL management had scheduled one ship of LNG cargo from a contractor at 11.37 per cent but this ship was rescheduled for June next year. This also resulted in shortage of gas in the country.

The SNGPL and the SSGC are bound to give new connections of gas after meeting requirements of existing gas consumers. But these companies had been allegedly giving new gas connections in constituencies of parliamentarians in the past governments which also resulted in gas shortage.

Constitution of new board of directors  

During the CCE meeting, the role of board of directors of the SSGC, the SNGPL and the PSO was also discussed. The boards of these companies were formed during previous Pakistan Muslim League-Nawaz (PML-N) government on political basis.

The PM directed the Petroleum Division to initiate the process of re-constituting these boards by bringing professionals from market. He further directed to bring cases of reconstituting the board of directors in a cabinet meeting next week.

Import of furnace oil

Prime Minister Imran Khan also expressed concerns over piling stocks of furnace oil in the country. He directed to continue ban on import of furnace oil in the future. He said oil refineries should find out options of export of furnace oil in future to dispose of their stocks.

According to an official statement, the PM was briefed in detail about demand and supply situation in the power sector, the projections of petroleum and power division for the next six months, the existing energy mix, availability and utilisation of indigenous as well as imported gas and way forward towards addressing various issues related to energy sector.

The meeting was also briefed about gas management plans of the SNGPL and the SSGC for the winter season. It was informed that despite sudden drop of temperature and increased demand for gas, uninterrupted supply to domestic, commercial and zero-rated industries would be ensured.

“Efforts were also being made to curtail the duration of gas load-shedding to other sectors such as CNG, captive power plants of general industries.  Discussing the issue of fuel import, it was decided to immediately notify ban on any further import of furnace oil,” it said.

The issue of production and storage of furnace oil by the local refineries was also discussed during the meeting. The PM directed that a detailed plan, in consultation with refineries, regarding upgrading of existing facilities and export of surplus furnace oil should be worked out on priority.

It was decided that the ECC would be briefed, in its next meeting, about the availability of urea stocks in the country and its pricing.  It was decided that a detailed plan would be worked out to ensure optimal utilisation of RLNG Terminals.

It was further decided that the Power Division will submit a monthly DISCO-wise report to the CCoE about transmission and distribution losses and update on recoveries of receivables.

Ministry of Petroleum was directed by the CCoE to submit a detailed plan on reduction of losses due to Unaccounted For Gas (UFG).  The PM directed that policy on renewable energy be finalised by end Jan.

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