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Express Tribune
4 days ago
- Business
- Express Tribune
'Special relief in power tariff still in place'
A special relief involving a Rs7.41 per unit reduction in electricity price, as announced by Prime Minister Shehbaz Sharif, is still in effect despite a rising cost of electricity. According to a statement issued on Saturday by the Ministry of Energy, the cost of electricity generation is increasing due to the lowest hydropower generation in the country's history in recent months and the reliance on expensive power plants running on alternative fuels. "In view of this decline in hydropower production, the Ministry of Energy has issued directives to all provincial governments and relevant federal ministries to enforce Energy Efficient Building Codes, so that electricity bills can be reduced during periods of extreme heat and cold." In addition, it said, the government is preparing to offer energy-efficient fans — which consume up to 70% less electricity — on easy interest-free installments, which will help in replacing old fans and significantly lowering electricity bills. Federal Minister for Energy Ali Pervaiz Malik on Friday stated that power-generating companies are not utilizing imported gas as per agreements and resultantly expensive gas is being sold to domestic consumers at subsidized rates, leading to a rise in circular debt. "The power companies are violating their agreements, which is increasing the liabilities of the national gas importing companies," said Malik, while speaking to the media at the head office of the Sui Southern Gas Company (SSGC). Malik highlighted that the government's success in reducing electricity prices and maintaining current petrol and diesel prices is a significant achievement. However, relief in the electricity sector has become a burden on the petroleum sector.
Express Tribune
5 days ago
- Business
- Express Tribune
Electricity focus hurts balance
Listen to article Federal Minister for Petroleum Ali Pervaiz Malik has stated that the overemphasis on the power sector in recent years has undermined other vital components of Pakistan's energy landscape, particularly the gas and petroleum sectors. During a visit to the Sui Southern Gas Company (SSGC) head office in Karachi, Malik remarked that while electricity remains a critical component of national energy planning, the persistent neglect of the petroleum and gas sectors is aggravating existing problems, most notably the growing circular debt. He revealed that power generation companies had committed to purchasing six LNG cargoes but are now failing to honour those agreements, leaving around 600 million cubic feet per day (mmcfd) of imported RLNG unused. This failure, he cautioned, is leading to an accumulation of receivables at Pakistan State Oil (PSO) and contributing to a rise in circular debtcontrary to International Monetary Fund (IMF) directives aimed at reducing it. Malik disclosed that the government is considering borrowing from banks to cover gas-sector dues, following a financing model already used in the power sector. He also raised the alarm over rampant diesel smuggling, calling it a "cancer" within the petroleum industry. To counter this, the ministry has launched a wide-ranging digitisation initiative. All trucks transporting petroleum products will be brought under a digital monitoring system, and every unloading point will be officially recorded. The digitisation drive will also cover petrol pumps across the country, where manual nozzlesfrequently used for fuel theft or the sale of smuggled fuelwill be replaced with digital meters linked directly to the Federal Board of Revenue (FBR). To finance this upgrade, the petroleum ministry is preparing a proposal for the Economic Coordination Committee (ECC) to approve an additional fee on petroleum products. Though Malik did not specify the fee amount, sources suggest it may be Rs1.35 per litre for oil marketing companies and Rs1.40 for dealers. On the issue of new residential gas connections, Malik said a final decision would be made after consultation with Prime Minister Shehbaz Sharif. He noted that the gas pipeline infrastructureparticularly in Karachiis outdated, with some pipelines over 40 years old. SSGC's network alone spans 55,000 kilometres, underscoring the magnitude of the challenge. Malik also discussed plans to improve energy trade with the United States by exploring petroleum imports. A special committee under the finance minister is reviewing the proposal. He concluded his Karachi visit with a tour of Pak-Arab Refinery Limited (PARCO), where he was received by Managing Director Irteza Ali Qureshi and senior company officials.
Express Tribune
5 days ago
- Business
- Express Tribune
Power companies violating agreement: minister
Federal Minister for Energy Ali Pervaiz Malik has stated that power-generating companies are not utilizing imported gas as per agreements and resultantly expensive gas is being sold to domestic consumers at subsidized rates, leading to a rise in circular debt. "The power companies are violating their agreements, which is increasing the liabilities of the national gas importing companies," said Malik, while speaking to the media at the head office of the Sui Southern Gas Company (SSGC) on Friday. The minister revealed that smuggled fuel is spreading like a "cancer," and to curb it, petrol pumps are being registered and digital nozzles installed. "The Oil and Gas Regulatory Authority (Ogra) will become fully digital in two to three months, enabling complete monitoring of fuel supply and sales from refineries to petrol pumps," he said, adding that 85% of moving stock digital tracking has already been completed. The energy minister said no final decision has been made yet to increase the Petroleum Development Levy (PDL), and its enforcement on prices has not taken place for now. He emphasized the need for a coherent and unified energy policy, suggesting that all energy sources must be evaluated on equal standards. Malik highlighted that the government's success in reducing electricity prices and maintaining current petrol and diesel prices is a significant achievement. However, relief in the electricity sector has become a burden on the petroleum sector.
Business Recorder
5 days ago
- Business
- Business Recorder
Govt working to lift ban on new gas connections, says minister
Federal Minister for Petroleum Ali Pervaiz Malik said on Friday the government was working to lift the nationwide ban on new gas connections, as he acknowledged the safety concerns over the use of Liquefied Petroleum Gas (LPG) gas and incidents of cylinder explosions. 'Prime Minister Shehbaz Sharif and I have already discussed the issue of lifting the moratorium (on new gas connections)…we are to meet again with the resolve to end the ban soon,' said Ali Pervaiz Malik while talking to the media during his visit to the Sui Southern Gas Company Limited (SSGC). He said the government was aware that households and commercial customers were using expensive LPG gas despite having safety issues and risk of explosions associated with the use of LPG cylinders. The government announced moratorium on new gas connections in December 2021 and implemented in letter and spirit from March 2022. SSGC issues gas supply schedule for Ramazan 2025 According to a SSGC press statement, Minister Malik said that the energy sector 'is just like oxygen to the economy and they are taking initiatives to keep the supply and tariffs in line with the international market'. 'Early signs of recovery in key sectors have started showing up, but for that we need to maintain the same momentum and stability while moving forward,' the minister was quoted as saying in the SSGC statement. The issues related to downstream and upstream sectors were being worked on by the PM and the ministry, he informed. 'We are taking concrete steps to alleviate citizens' sufferings in the upcoming budget.'
Business Recorder
28-05-2025
- Business
- Business Recorder
When having too much still isn't enough
Pakistan's energy planning is entering a surreal phase. A country that once chased gas cargoes across oceans and rationed fuel to industry now finds itself unable to utilize what it already has. In a turn of events that defies economic logic and exposes deep flaws in governance, Pakistan is now facing a surplus, not of problems, but of gas. Yet the electricity remains expensive with little reduction in tariff, efficient plants stay idle, and energy bills continue to spiral. This is not a crisis of resources; it is a crisis of coordination. The government's recent decision to impose a levy on captive power use aimed to bring industrial consumers back to the grid. In principle, this was a step forward, correcting years of inefficient parallel generation. But the equation is not complete, and leads to the question what to do with the Cheap Spare Indigenous Gas that Captive is not going to consume? This move caused a sharp drop in gas off-take from captive users, estimated at nearly 200 mmcfd on the SSGC network alone. Of this, at least 100 mmcfd is now stranded, with no alternative demand in sight. Total indigenous gas surplus is estimated to have reached approximately 300 mmcfd across the country. Stranded gas is not just a lost opportunity, it is a liability. Gas that cannot be sold to industry or power producers will either be pushed into households at highly subsidized tariffs (further inflating the circular debt), or worse, left unused. Rising linepack pressures in the transmission system have already forced gas producers to shut off wells, even as Pakistan continues to service long-term RLNG contracts and diverting RLNG shipments. Sometime Indigenous Gas wells are shut off to make way for imported RLNG. It is important to note that RLNG and Indigenous-Pipeline Quality Gas molecules are the same, and molecules do not carry a price tag once inserted in the pipeline. Pricing is done in SSGC or SNGPL Accounting Softwares. Economic absurdity is shutting local wells while importing gas from abroad. Meanwhile, the RLNG that is available is being poorly utilized. Efficient RLNG-fired plants like Balloki, Bhikki, and Haveli Bahadur Shah, each over 1,200 MW and capable of running in high-efficiency combined cycle mode, are underused or being operated in single-cycle mode due to distorted merit order decisions and the high standalone price of RLNG (Rs 3,500/mmbtu). These plants are consuming close to 0.19 to 0.20 cubic meters of gas per kWh instead of their design-efficient 0.15, pushing the fuel cost up to Rs24 to 26 per unit, making them uncompetitive. The tragedy is that a solution exists and is already practiced in other sectors. Blending of RLNG and indigenous gas is already done for industrial and captive users through accounting, not physical mixing. The same can and must be extended to power producers. For example, blending 60 percent indigenous gas at Rs 1,050/mmbtu with 40 percent RLNG at Rs 3,500/mmbtu results in a weighted average fuel cost of Rs 2,030/mmbtu. When this is applied to efficient CCGTs operating at 8,000 Btu/kWh (about 0.0053 mmbtu/kWh), the fuel cost becomes just Rs 10.76/kWh, significantly lower than RLNG-only generation and even below imported coal (Rs 14 to 16/kWh) and furnace oil (Rs 30+/kWh). The Pricing of Gas by OGRA is distorted, the mechanism of Pricing Gas is 40 years old, world has shifted to real-time pricing of energy and we continue to price gas twice a year with a slow, tortoise speed and red-taped mechanism. Balloki, for instance, if run at 85 percent plant load factor using blended gas, could generate over 9,100 GWh annually. The cost savings just on fuel, Rs 11.24/kWh versus RLNG-only, would amount to over Rs 102 billion per year for one plant alone. Apply this logic to the full fleet of RLNG plants (about 3,600 MW) and the annual savings cross Rs 300 billion. Add in the reduction of coal imports, improved gas field economics, and improved circular debt recovery, and the benefit climbs even higher. Instead of using these surplus resources intelligently, Pakistan continues to sabotage itself. Rooftop solar installations under generous net metering policies are shaving off daytime demand, right when RLNG plants on Blended Tariff are needed to run optimally. Net metering allows unit-for-unit net-off and full retail buyback rates, creating perverse incentives. The government attempted to revise this policy, including lowering the buyback rate and adjusting the net-off window, but was forced to roll back reforms due to public backlash. At the same time, utility-scale solar projects, cleaner, cheaper, and easier to dispatch, have been excluded from the IGCEP 2024 to 2035. The result is policy incoherence. Off-grid rooftop systems are rewarded while grid-connected solar is ignored, and the system becomes more unstable. Solar-driven demand suppression, coupled with inefficient fuel dispatch, is a key reason RLNG remains surplus. It is not surplus because Pakistan has too much. It is surplus because we refuse to use it smartly. Blending gas for power producers does not require physical mixing. It requires accounting adjustments, coordination between SNGPL, SSGC, the Petroleum Division, and the Power Division, and a regulator that understands that efficient dispatch is not a theoretical construct but a fiscal necessity. If this coordination is enabled, surplus gas can be blended on paper and allocated to CCGTs. These plants then move up the merit order, displacing inefficient generation, lowering average cost of electricity, and stabilizing the grid. Larger fallacy lies in the incomplete treatment of captive power. The Solution is simple, Blend Gas+ RLNG by accounting as already being done for other categories of consumers of gas) and supply it to the Most Efficient CCGTs, make them move up in the merit order and get maximum output, this will not only produce cheaper electricity but the issue of Rising CD what has been a headache for our government can also be solved with additional benefit of Stranded RLNG Consumption. Shifting industry to the grid is not a complete solution. If the gas they once used remains unutilized or misdirected, the circular benefit is broken. True reform requires that the released gas be rerouted to efficient turbines via blends, something no one in government or even the IMF has understood. They treat captive reform as the endpoint. It is only the beginning. Without closing this loop, the government has merely shifted consumption, not optimized it. Pakistan doesn't lack gas. It lacks coherence. The solution isn't new generation capacity, more subsidies or financing the already inflated Circular Debt; it is simply to use what we already have, with logic and discipline. Until that happens, we will remain trapped in the same paradox, gas-rich, power-poor, and economically exhausted. (The writer is a power sector expert and a leading industrialist. He can be reached at: [email protected]) Copyright Business Recorder, 2025
