September 25, 2020

Gas Supply From Two Major Gas Facilities Halted On Governments Directive

The government has directed two of the country’s top gas-producing entities to halt gas supply and has directed the third one to reduce supply by half. The Sui gas facility and Nashpa Facility in KPK have stopped the supply of gas and the Qadirpur field in Sindh has reduced supply by half. This step was taken by the government to run RLNG Terminal-1 at 690 million cubic feet per day (mmcfd).

As per sources, the government reduced the supply of cheap gas as SNGPL and PSO had bought RLNG on “take or Pay” basis for the power sector, assuming that they would consume 850 mmcfd, but that did not turn out to be the case.

The power companies claim that they had reduced production because of the high power production from hydro projects and lower demand for power than they had previously assumed. Officials of the power sector also said that the authorities bought RLNG assuming the gas consumption of the power sector to be at over 1100mmcfd, while they had put the demand of 850mmcfd.

PSO and SNGPL have been raising this issue since the last 6 weeks but with no benefit and PSO is unable to discharge its RLNG cargo from Gunvor, and can face a penalty of $5 million due to buying on ‘take or pay’ basis.

The gas companies claim that the power plants in Haveli Bahadur Shah, Balloki, Bhiki and Kapco were taking only 66% of the gas they had ordered and the entire power sector was consuming approximately 630mmcfd against their allocation of 830mmcfd. They further said that the reduction in consumption of gas could disrupt the entire supply chain of RLNG

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