Energy crisis spreads to Karachi on gas supply diversion

Experts say LNG import the only short-term quick fix to curtail the crisis .

KARACHI:

For months Karachi remained immune to crippling power breakdowns, prompting politicians from other parts of the country to call for equal distribution of painful loadshedding. And so it has started in the port city where some areas remain without electricity for up to 10 hours.

The problem started couple of days back when the Sui Southern Gas Company (SSGC) had to divert just a small part of its supply to its sister company Sui Northern Pipelines (SNGPL), which serves Punjab and Khyber-Pakhtunkhwa.

As a consequence, gas supply to SSGC’s largest customer the Karachi Electric Supply Company (KESC) was cut by more than half. Without sufficient supply, the power utility was not able to run its power plants.

Operating power plants on furnace oil is out of the question, considering a backlog of over Rs42 billion, which the government has to pay KESC under subsidy passed on to consumers.

“Furnace oil is 3.8 times more expensive than gas,” said Ahmed Faraz, a KESC spokesperson. “In any case most of our plants can only run on gas now.”

KESC has an installed power generation capacity of around 2,300 megawatts (MW). Out of this, 1,010MW had been added to the system over the past five years and all of it is configured to use gas, according to Faraz.

Four of its units running on oil consume between 2,500-3,000 tons of furnace oil every day. With price hovering around Rs62,000 per ton, the daily fuel cost exceeds Rs155 million.

“It is a very expensive proposition. When we invested in the power plants, the government assured us that it will provide 130 million cubic feet of gas per day (mmcfd),” said Faraz.

Pakistan’s total gas production has remained flat at 4,000mmcfd, whereas the demand has surged beyond 6,000mmcfd. From factories to domestic consumers, everyone has felt the impact of shortages in the past few years.



SSGC had to divert 90mmcfd from its system to the SNGPL after a major gas field Qadirpur was shut for annual maintenance.

Secretary Petroleum Abid Saeed played down the issue saying such adjustments were routine. “There has been a shortage of 150mmcfd because of work being carried out at Qadirpur. I personally feel there has been some sort of miscommunication between all the companies. The situation will be back to normal in a day or two.”

Despite incentives offered by the government, the petroleum exploration and production companies have not been able to shore up output mainly because most prospective parts in Balochistan remain under siege of militancy.

Naeem Sharafat, who headed Pakistan’s first liquefied natural gas (LNG) project, warns that energy crisis will only deepen if the new government took a half-hearted approach to accepting bitter facts.

“We have been working since 2006 for LNG imports to start. There use to be just one proposed project and now there are five. No one knows what’s happening,” he said.

Mashal LNG initiated by SSGC was supposed to come online last year. Actual work on the terminal and allied facilities never started.

“Because of some wrong decisions, we have made a mockery of ourselves internationally. Every time there is a proposal to start imports, some group jumps in to have cut, spoiling the entire process,” said Sharafat, who worked on details of Mashal for six years.

Yet the fact that Pakistan is primarily a gas-based economy and has one of the finest pipeline infrastructure offers opportunity to international suppliers, he said.

“LNG import is the quickest solution we have to solve part of the energy supply issue. Imported gas will be expensive than domestic supply but 15% to 20% cheaper than furnace oil. We could use it to run our power plants,” he said.

Published in The Express Tribune, May 28^th, 2013.

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