The survey revealed that during July 2014 to February 2015, the two Gas utility companies (SNGPL & SSGCL) have laid 72 km gas transmission network, 1,040 km distribution and 758 km service lines and connected 59 villages/towns to gas network. Thus a total 206,473 additional gas connections including 206,127 domestic, 249 commercial and 97 industrial were provided across the country.
It is expected that gas will be supplied to approximately 419,445 new consumers during the fiscal year 2015-16. It said constrained natural gas demand stands at 6 BCFD against supply of 4 BCFD while the unconstrained demand for gas is estimated to be 8 BCFD or more than double the current domestic production. One risk associated with this sector is that there is continuous depletion of existing natural gas fields while the pace of new gas discoveries is quite slow.
The government is pursuing its policies of enhancing gas production to meet the increasing demand of energy in the country. Still for supply of gas, the government has given priority to domestic and commercial sectors followed by power sector while general industry, fertilizer and captive power sectors is on third priority. Cement and CNG sector are respectively on fourth and fifth priority of the government for supply of gas.
There is no gas load shedding in domestic and commercial sectors in the country. However, the Sindh and Peshawar High Courts have directed the federal government to adhere to the provision of Article 158 of the Constitution therefore the gas load management is mostly restricted to Punjab Province as its share in gas supply is about 5 percent while it has a share of almost 46 percent of national gas consumption.
The worrisome factor is that Pakistan's local gas reserves are depleting and if gas consumption grows annually even at moderate rates, the present recoverable reserve will largely be exhausted by 2025. As this limit approaches the marginal cost of gas supply will rise. The government promoted use of Compressed Natural Gas (CNG) to reduce pollution and to improve the ambient air quality. During past few years, CNG Industry has observed a tremendous growth. At present, Pakistan is the world leading CNG user country with more than 3 million Natural Gas Vehicles (NGVs) plying on the roads. The choice of conversion is mainly due to the fact that price of CNG is significantly less than petrol. At present there are 3,414 CNG stations across the country.
Liquefied Petroleum Gas (LPG) contributes to about 0.5 percent of country's total primary energy supply mix. Use of LPG as a domestic fuel is being encouraged. Increasing demand of natural gas with its limited supply has made room for Liquefied Petroleum Gas (LPG) which is also primary source of energy. The total supply of LPG during July-March, 2014-15 was 494,763 tones, accounted for about 0.5 percent of the total primary energy supply. Gas producing fields contributed 53 percent followed by refineries and imports with share of 26 percent and 21 percent respectively. Because of its characteristics LPG is fast becoming a fuel of choice in areas where natural gas distribution network is not available. The Oil and Gas Regulatory Authority (OGRA) is empowered to regulate the LPG sector under OGRA Ordinance, 2002 and LPG (Production & Distribution) Rules 2001 from March 15, 2003. The OGRA has simplified the procedure for grant of LPG license and the same is granted on fast track basis once the requirements are met.
Currently there are 12 LPG producers and 97 LPG marketing companies operating in the country having more than 4,482 authorized distributors. Due to augmented investment and future expansion plans of the LPG marketing companies, significant investment in LPG supply and distribution infrastructure has been witnessed.
The government has started importing Liquefied Natural Gas (LNG) to bridge widening gap between demand and supply. Energy cost calculations clearly prove that RLNG is cheaper than ALL other imported fuels for power generation in Pakistan. On April 27, 2015, the delivered price for fuel to power plants in Northern Pakistan on equivalent basis was $11.5/MMBTU for LNG, $12.6/MMBTU for HSFO, $13.8/MMBTU for LSFO, and $22.8/MMBTU for Diesel.
In this context, LNG with a notional Brent linkage of 14.5 percent is 10 percent cheaper than High Sulphur Furnace Oil (HSFO), 20 percent cheaper than Low Sulphur Furnace Oil (LSFO), and half the price of Diesel. In addition, as a fuel for power generation, LNG as compared to liquid fuels provides (i) substantially greater efficiency (ii) lower maintenance costs (iii) no storage costs (iv) easy transportation and (v) no pilferage or adulteration issues.
Thus it is expected that import of LNG will help overcome the shortage of gas as providing LNG to power sector will give space in availability of gas for other sectors. The government is also making efforts to attract private investors for exploring new gas discoveries.
Pakistan has huge coal reserves estimated at over 186 billion tons; including 175 billion tons identified at Thar coalfields. Pakistan's coal generally ranks from lignite to sub-bituminous, therefore, to cater to domestic demand almost 4 million tons of coal is imported. The falling of international oil prices saved foreign exchange due to lower import bill (an amount of $3 billion approximately will be saved) while reduction in domestic petrol prices decreased the private consumption expenditure on oil thus money saved could be spent on other goods and services. Due to substantial decrease in retail prices on December 1, 2014 and afterwards on January 1, 2015, sales of petrol witnessed unprecedented increase.