Providing gas to consumers through pipes has been a preferred mode of gas distribution in Pakistan. However, independent consultants, Taseer Hadi and Co appointed by Oil and Gas Regulatory Authority (Ogra) under a decision of the Economic Co-ordination Committee (ECC) of the cabinet has a different view as they have recommended limiting the expansion of piped-natural gas to uneconomical consumer categories and replacing it with cylindered-gas to contain high energy losses amid scarce domestic resources. The consultants have also proposed a special "cost of service study" to determine actual cost of transporting gas to end-consumers based on individual cost drivers for each consumer class, spread geographically across the gas network. The plan will enable differential pricing based on cost of service for specific consumer segments and geographics. Bottled LPG was not only easy to provide to areas where metering and segmentation was not possible but cylinders were easy to operate and convenient to be delivered at consumers' doorsteps. Besides, theft of gas could be effectively checked and the matter of exaggerated losses by SSGCL and SNGPL could also be resolved by reverting to non-piped gas.

The observations of independent consultants do not seem to have been taken seriously by the government. More recently, a decision by the ECC at the request of Petroleum Minister Shahid Khaqan Abbasi to provide liquefied petroleum gas to consumers through pipeline network linked with LPG air mix plants with three such plants around Murree confirms such an impression. The fact of the matter is that Pakistani authorities have largely relied on piped gas and avoided the use of cylinders for the distribution of gas with the result that Pakistan has now a wide network of piped gas. This is mostly done at the recommendations of politicians who generally seek to appease their constituents as elections near. The pressure is exerted by the public because piped gas is generally cheap and convenient to use. This practice has been going on for such a long time that Pakistan has now an extensive gas network of over 11,538-km transmission, 114,982-km distribution and 31,058 services gas pipelines to cater to the requirements of nearly 8 million consumers across the country by providing about 4 billion cubic feet per day natural gas. Such a huge system could have been manageable if the theft from the system and losses to SNGPL and SSGCL could have been avoided but this has not happened. In the present environment, therefore, there seems to be no alternative but to be extremely selective in providing natural gas to consumers through pipes and accept the recommendations of independent consultants. To start with, political pressure should not be brought on the gas utilities to provide gas through pipes to any segmentation of population and such a facility should only be provided on purely economical basis. For instance, only densely populated areas with high recovery rates may be provided gas through pipes while rural areas with a scattered population and possibility of low recovery rates should be asked to get gas through cylinders to reduce losses and ensure the financial viability of gas companies. The ECC could also apply other criteria but the objective should be to put this scarce resource to optimal use with no burden on the budget. The prescription of such a criteria has become all the more necessary when domestic resources of gas are drying up and Pakistan has to increasingly rely on the import of gas to meet its domestic requirements.

Copyright Business Recorder, 2017