Gas Demand Dip Prompts SNGPL’s Call to MOL for Supply Cuts
Staff Report
Gas demand dip by the power sector poses a serious threat to the Sui Northern Gas Pipeline Limited (SNGPL) system, prompting the company to request MOL, an oil and gas exploration firm, to reduce gas production.
“We are experiencing high pressure on our system due to the low demand for gas by the power sector,” SNGPL management wrote in a letter to MOL management.
The management has urged MOL to cut the gas supply by 75 mmcfd under these circumstances to manage the system effectively.
Although the power sector has been receiving LNG to fuel power plants, power distribution companies (Discos) now claim a drop in electricity demand.
This drop is occurring despite 1.5 million consumers applying for new connections, which the Discos have not yet provided.
Due to higher electricity prices, consumers are turning to solar energy, with wealthier consumers shifting towards solarization while poorer consumers continue to rely on the national grid.
Furthermore, industries are facing closures due to the high electricity prices, resulting in decreased electricity consumption.
SNGPL, a gas utility supplying gas to Punjab and KPK provinces, faces financial pressure due to LNG injection into the system.
It currently owes over Rs 500 billion to Pakistan State Oil (PSO) for RLNG supply.
The power sector is also hesitant to pay bills to the gas utility, prompting SNGPL to recently write to the energy ministry requesting intervention to clear outstanding dues.
Pakistan’s power sector shifted from furnace oil to RLNG after 2015, when Pakistan State Oil (PSO) began importing LNG from Qatar.
Since then, PSO receivables have accumulated due to SNGPL’s failure to pay dues.SNGPL shareholders Approve 40% Cash Dividend for FY 2021-22
SNGPL has encountered difficulties in receiving LNG bills from domestic consumers, partly due to a lack of a legal framework.
Although the Oil and Gas Regulatory Authority (Ogra) permitted the gas utility to accept partial payments from domestic consumers, SNGPL aims to receive full payments from those who received LNG during the winter months.
