Gas theft …nonpayment of bills and unaccounted for gas

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THE PAKISTAN Integrated Energy Plan (2009-2022) sets out the governments vision of a sustainable, low emissions energy system. Within this plan, the gas sector has a critical role to play in achieving the Governments objective of maintaining security of energy supply at competitive prices as the country makes the transition to a sustainable energy future. The present crisis in the natural gas sector is because of multiple factors and indicative of a complex crisis of governance, gas theft and un-accounted for gas (UFG).

The natural gas sectors governance indicates towards the inability of the government to handle the crisis and the absence of proactive engagement of citizens with the Government. There is a lack of citizens participation in the sectors activities due to lack of sufficient independent evidence and perceived technicalities of the sector. The perceived technical nature of the sector and lack of capacity of the civil society has resulted in absence of citizens voice to play an active role in making the sectors operations, planning, policy making and regulation more transparent.

Asif MasoodAsif Masood

Energy BalancePetroleum products and natural gas account for about 80 percent of commercial energy use, hydroelectricity for about 15 percent, and coal and liquefied petroleum gas (LPG) for the balance. Proven oil reserves are relatively small (436 million barrels). Over the past three years, imports of liquid fuels were about 20 million tons (MMT) per annum (out of a total consumption of 16.85 MTOE), resulting in an import bill of some $12 billion. On the other hand, gas reserves at 27.0 trillion cubic feet (TCF) are equivalent to more than 25 years of current production (about 900 billion cubic feet (bcf) per annum), and there is scope for a significant increase in gas production, and hence in the share of gas in the commercial energy mix.

Transparency in Natural Gas Sector

The importance of energy security cannot be denied, it demands availability as well as affordability for the national economys growth. Pakistan never had a natural gas surplus to the extent that Pakistan would go all out to adopt an energy policy that would make natural gas as the prime energy source feeding into five highly critical sectors of national economy. Secondly the myth why the pricing of this precious indigenous resource was not based on the principle of scarcity and optimal utilization baffle experts.

Non-Customer gas theft

Advisor to Prime Minister on Petroleum Natural Resources Dr Asim Hussain has revealed that as many as 200 CNG stations were involved in gas theft. Oil and Gas Regulatory Authority had been informed of the gas theft; but no action was taken against theese outlets. The advisor refused to give names of the CNG stations involved in the gas theft but said the OGRA has been given the list containing their names. Gas theft is also on the rise, as it surged to 380 million cubic feet per day (mmcfd) that is 200 mmcfd from SNGPL and 180 mmcfd from Sui-Southern Gas Company (SSGC) systems. Ministry of Petroleum and Natural Resources announced that gas is being illegally utilized by all consumers including industrial, commercial and domestic. Gas pipelines in Pakistan suffer from theft of nearly 380 mmcfd on average, of about 12.5 percent of total production, a ratio that is significantly lower than line losses in the power sector, but still high and rising. The companies are supplying about 2,900 mmcfd through their extensive transmission and distribution network of some 140,000 kilometers and serving 6.3 million consumers in their respective franchise areas.

According to Petroleum Institute of Pakistans (PIP) estimates domestic gas production will decline to less than 1,000 mmcfd by 2026 as the existing fields are exhausted and the energy industry fails to find new ones to replace them. While new fields such as Zamzama and Manzalai have come online, they are much smaller than some of the older fields, such as Sui and Qadirpur, where gas production has started declining with each passing day.

UN-Accounted for Gas (UFG)

Rise in unaccounted for gas (UFG) which means difference between total volume of gas purchased by the companies and volume of metered gas supplied to consumers. UFG levels of Sui Southern Gas Company Limited (SSGCL) and Sui Northern The SNGPL have remained abnormally high of over 10 per cent last fiscal year. International bench mark of UFG for companies is two per cent. According to OGRA estimates one per cent of UFG of both companies at average price of fiscal year 2009-10 translated to a revenue loss of Rs2.5billion per year. Massive monetary losses in the form of high UFG losses are recovered by utilities by passing on the impact to consumers. The government has recently imposed gas theft act which allows imprisonment and fining people involved in gas theft. OGRA has recently enhanced 11 to 14 per cent in gas tariff of two gas utilities from January 01, 2013.

The writer is Project Manager at Consumer Rights Commission of Pakistan. His office website is <www.crcp.org.pk>


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