In response to Sui Southern Gas Company’s (SSGCL) violation of the Gas Priority List, Transparency International Pakistan (TIP) has requested that Prime Minister Shehbaz Sharif look into the complaint made against K-Electric (KE) for charging electricity at Rs. 35 per unit as opposed to Rs. 17.5 per unit.
TIP claimed in a letter to the prime minister in this regard that SSGCL is contravening the Gas Priority List, which the Ministry of Energy had informed the company of in 2018, by stopping Natural Gas to KE since October 2021 in collusion with the owners of captive power plants, costing KE consumers an additional Rs. 131 billion every year. According to the letter, TIP has been made aware of a complaint in this regard.
TIP highlighted that according to the Ministry of Energy (Petroleum Division), as per Natural Gas Allocation and Management Policy 2005-Revision in Priority Order, domestic and commercial consumers would get natural gas as first priority, power sector on second, general industrial, fertilizer and captive power on third, cement sector including its captive Power on forth and CNG sector on fifth.
However, SSGCL has changed the priority of Captive Power to second and eliminated the power sector without any approval from the Ministry of Energy. Instead of Natural Gas, KE is being supplied RLNG which is costing Rs. 4,656 per MMBTU, whereas Natural Gas costs Rs. 857per MMBTU.
TIP, in its letter, stated that SSGC is supplying a total of 210 million cubic feet per day (MMCFD) natural gas to captive power plants at the rate of Rs 857 per MMBTU (to captive power plants) and Rs. 1087 per MMBTU (to captive general industries) which is at third priority order, while the power sector is at the second priority order and is supplied 70 MMCFD expensive RLNG at the rate of Rs. 4,656 per MMBTU instead of natural gas, consequently violating the gas priority list.
TIP said that currently, due to power generation on regasified liquefied natural gas (RLNG), the consumer of electricity is compelled to pay Rs. 17.5 per unit additional electricity charges (including all taxes, FCA and line losses) compared to electricity generation on natural gas, which means that if a consumer consumes on average 500 units per month, the 2.5 million consumers are paying about Rs. 131 billion extra per year in the consumption of electricity.
SSGCL maintains that it manages the load according to the available volumes which are currently up to 130 MMCFD maximum natural gas for power generation to KE. Any additional volumes required by KE over and above these volumes will be met through RLNG.
TIP further highlights that the export industries in Punjab are supplied RLNG at $9 per MMBTU (Rs. 1980 per MMBTU at Rs. 220 conversion rate), whereas the export industries in Karachi are supplied natural gas at Rs 857 per MMBTU, which is a big revenue loss, and this is also in connivance with the owners of the export industry.
According to TIP, it appears that SSGC is contravening the Gas Priority List notified in 2018 by supplying pricey RLNG to the KE instead of natural gas, which has increased the cost of electricity and made life extremely difficult for Karachi’s consumers. This is based on the authenticity of the submitted documents.
TIP asked the prime minister to look into the complaint, instruct the relevant agencies to ensure that the Gas Priority List, which was announced in 2018 in accordance with the decision of the Federal Cabinet Committee on Energy, is implemented, and to make sure that SSGC supplies 130 MMCFD of natural gas to power plants so that lower-cost electricity can be generated for end users.
It further requested the prime minister to address the discrimination in supplying RLNG and Natural Gas supply to the export industries of Punjab and the export industry of Karachi which is also causing huge losses to the government.