File photo, courtesy PID
Caretaker Energy Minister Muhammad Ali on Thursday announced that gas for domestic consumers will likely only be available for 8 hours a day during the upcoming winter season, adding the anticipated LNG cargoes cannot match the demand.
Addressing a conference alongside interim Information Minister Murtaza Solangi, he said the government could not provide gas supply 24/7. Instead, he said, the aim was to provide it for 2 hours each during the morning, afternoon and evening. Confirming that two LNG cargoes had been arranged for December—with plans underway to secure another two for January—to address the shortage, he admitted that this would still prove insufficient to meet the overall demand.
Explaining that 30 percent of the country uses piped gas, while 70 percent rely on LPG and burning wood, he said authorities had worked to insulate low-income consumers from a tariff increase aimed at curtailing the gas sector’s circular debt. Lamenting that high-income consumers in urban areas had been getting gas at 25 percent of the cost borne by the impoverished utilizing LPG in rural areas, he said of the 10 million domestic gas connections in the country, there had been no tariff increase for 57 percent. These 57 percent, he said, were consuming 31 percent of the total piped gas and would pay 11 percent of the total cost following the tariff increases.
Noting that the fixed monthly charge of Rs. 10 was increased to Rs. 400/month, he claimed this was meant to bring the price of piped gas on par with that of LPG. “Similarly, middle-slab consumers, comprising 39 percent of total consumers, are using 52 percent of available gas and paying 49 percent, while the wealthy are consuming 17 percent while paying 39 percent of the total,” he added.
The government has kept the power sector, tandoors, and the fertilizer sector insulated from the tariff increase, he added.
According to Ali, the caretaker government has “frozen” the energy sector’s circular debt with hikes to power and gas tariffs in line with commitments to the International Monetary Fund (IMF). Warning that gas supplies were declining at a rate that domestic consumers would all need to shift to LPG within two years, he clarified that the government would continue its policy of not providing any new gas connections.
Claiming the government’s moved would ensure the circular debt did not rise beyond its current value of Rs. 4,500 billion—Rs. 2,300 billion of which is in the electricity sector—he maintained this was the first time this was achieved in 10-15 years. Warning that the gas sector was on the verge of collapse as exploration and production companies were leaving the country due to financial risks, he said the situation was aggravated due to the economic crunch, which hampered exploration activities and gas imports.
To a question, he said the new prices would be implemented as soon as the federal cabinet approved them.