Joint letter of BMG, KCCI chiefs: Shehbaz urged to call emergency meeting on gas supply issues during winter

KARACHI: Chairman Businessmen Group (BMG) and Former President KCCI Zubair Motiwala and President of KCCI, Muhammad Idrees have proposed Prime Minister Muhammad Shehbaz Sharif to summon an emergency meeting on top priority wherein all the stakeholders/ experts must also be invited to extensively discuss the overall gas demand/ supply situation in addition to exploring ways and means of how to efficiently deal with gas shortages during this year’s winter season.

In a letter to Prime minister, they said that the winter season, this year, is expected to be harsher due to the after effects of climate change which would surely require an extraordinary plan of action for dealing with the anticipated gas crisis but unfortunately, no measures have been taken so far by the government to avert the gas crisis.

In this regard, we fear that keeping in view the disastrous situation witnessed last year and if this pressing problem is not given due attention this year, the industries would be compelled to either completely shut down their units and move somewhere else or limit down their production according to gas supply which would have serious repercussions on the overall economy as well as the exports due to relocation of industries and flight of capital from the country.

We would like to mention that there had been continuous supply shortfall of gas in the year 2021 when the general industries of Karachi faced around 12 hours of load shedding which started on 1st January 2021 till December 2021 and the gas supply during last three months, i.e. October, November & December, was dreadful.

There was some respite in gas supply in the first quarter of 2022 however, the pressure remained low between 1-3psi and did not reach the optimal level of 8psi. Similar situation was witnessed at those industries which were being supplied dedicated RLNG.

The gas was mostly supplied during night time which created additional challenges for the industrial sector. The problem of gas load shedding is particularly more intense in Karachi only where production activities dropped drastically.

During the last winter, captive power plants of general industries were compelled to shutdown to manage gas supply shortfall and these CPPs are still not being allowed to operate as the relevant departments are reluctant to allow these industries to resume electricity generation through CPPs.

On the other hand, the gas exploration and production companies are also complaining of rising receivables which exceed $321 million (Copy of the overall break-up of all receivables along with a letter about receivables issued by Pakistan Petroleum Exploration and Production Companies Association are also enclosed for your perusal) in addition to huge receivables of $2 billion equivalent to around Rs460 billion.

With such exorbitant receivables, the exploration & production companies were not even in a position to carryout maintenance of wells therefore they have curtailed gas production which was one of the key reasons for gas shortages being suffered by the country. If this issue stands unattended, it would create a disastrous situation in winter.

It is highly unfair to shift the entire burden of gas shortages on the shoulders of industries in Karachi only which, despite an extremely challenging environment, highest ever cost of doing business and many other odds, continue to contribute more than 68 percent revenue to the national exchequer and hold 54 percent share in country’s overall exports yet the industries of the city are not being provided basic amenities.

Here, it would be worth mentioning that in the winter season, SSGC is directed to supply 200 mmcfd gas to Balochistan because of the severe weather whereas the factual position is that SSGC draws only 110 mmcfd gas from Sui and SNGPL draws 280 mmcfd hence, this is a gross injustice as while the requirement in Balochistan hikes, the gas needs to be given but it should rationally be given i.e., if SSGC is drawing 110 mmcfd, its share comes to 54 mmcfd, not 200 mmcfd. Similarly, SNGPL withdrawing 280 mmcfd from Sui should give remaining 146 mmcfd to overcome the rising demand of gas in Balochistan during winter. It is a very simple understanding that we cannot give more than what we are taking. The 200 mmcfd burden on SSGC during winter for Balochistan is the basic cause of severe gas shortages in Karachi where almost no gas is available during winter season.

This should be decided judiciously and in most just manner. Hence, we would like to fervently appeal Your Excellency to take concrete steps before the gas crisis worsens during the forthcoming winter season.

In this regard, we would like to propose to kindly summon an Emergency Meeting on top priority wherein all the stakeholders/ experts must also be invited to extensively discuss the overall gas demand/ supply situation in addition to exploring ways and means of how to efficiently deal with gas shortages during this year’s winter season.

Keeping in view the seriousness being exhibited by your good self for resolving issues being faced by the business community of Karachi, we are fairly optimistic that Your Excellency would take notice of KCCI’s appeal and immediately summon the proposed emergency meeting so that gas crisis could be amicably resolved which certainly prove beneficial for the country’s ailing economy.

We will anxiously be looking forward to your support and cooperation in this regard and shall be very thankful if you kindly instruct Ministry of Energy to notify precise date and time for the said meeting to this Chamber so that we could ensure proper representation of relevant stakeholders and experts at this crucial meeting.

Copyright Business Recorder, 2022