State-owned companies are paying the price of overcoming the gas crisis in winter season, which adds billions of rupees to the circular debt due to diversion of expensive liquefied natural gas (LNG) to residential consumers without any legal framework.
The provision of LNG to the domestic sector is going to hit the public gas utilities hard, as the imported gas supply will add another Rs50 billion to the circular debt, say industry officials.
Receivables of Pakistan State Oil (PSO), a state-run oil marketing company which also imports LNG cargoes from Qatar, have touched a record high of Rs420 billion primarily due to the failure of gas utility Sui Northern Gas Pipelines Limited (SNGPL) to pay for LNG supplies. SNGPL owes Rs189 billion to PSO.
SNGPL is also facing financial trouble in the absence of a legal framework to recover bills for LNG supplies to the domestic gas consumers in the winter season.
It has to receive over Rs100 billion from these consumers on account of LNG provision in previous winter seasons.
It is now expecting addition of Rs50 billion to its receivables in the current winter in the wake of diversion of LNG to the residential consumers to bridge the demand-supply gap, say officials.
The government has not yet been able to put in place a legal framework to recover the cost of LNG supplies to the domestic consumers.
On the other hand, the sectors which are supposed to receive LNG under the legal framework are facing suspension of gas supply.
A delay in awarding the idle LNG terminal capacity to the private sector has worsened the gas crisis. State-owned Pakistan LNG Limited (PLL) has also failed to secure required LNG cargoes for December 2021 and January 2022.
In a statement on Wednesday, the All Pakistan CNG Association (APCNGA) said that the decision to discontinue gas supply to the compressed natural gas (CNG) filling stations was illegal and it kicked off nationwide protests against the move.
A protest and sit-in was held outside the offices of Sui Southern Gas Company (SSGC) in Karachi, after which the protest drive would be extended to Punjab, the association said.
“Some elements are giving wrong information to the federal cabinet, resulting in erroneous decisions and putting hundreds of thousands of jobs and investment worth billions at stake,” said APCNGA Group Leader Ghiyas Abdullah Paracha.
He appealed to Prime Minister Imran Khan to take notice of the situation and intervene to provide relief to the masses and investors.
Paracha termed the suspension of gas supply to the CNG stations illegal, saying the economic merit list of major gas consumers had been ignored.
According to the national gas policy, the CNG sector had been placed at number four while in the LNG policy the sector had been placed at the second position, he pointed out.
“CNG is ranked second in the LNG policy because it pays the highest price for gas and also pays the highest amount in taxes but the cabinet is taking decisions against the gas distribution plan.”
Published in The Express Tribune, December 23rd, 2021.
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