Pakistan cuts gas supply to industry, CNG pumps to curb blackouts

Karachi (Platts)--8 May 2014 547 am EDT/947 GMT

Pakistan plans to cut natural gas supply by around 150,000 Mcf/d to fertilizer plants and CNG pumps to increase electricity supply to cities facing daily rolling blackouts, according to officials in the power and oil ministries.

The ministries decided to reduce the duration of load shedding in the eastern Punjab province, where daily power outages last 10-14 hours, the two sources said on condition of anonymity.

Pakistan's fertilizer sector previously consumed about 600,000 Mcf/day of gas, and CNG pumps use about 400,000 Mcf/day.

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On Thursday, the government started reducing gas supply to fertilizer plants by 50,000-75,000 Mcf/d, with the remainder of the cuts coming soon, the sources said.

The plan is expected to generate about 600 MW, still well below the 4 GW shortfall. Pakistan's overall electricity output stands at 11.5 GW, about 74% of total demand of 15.5 GW, the sources said.

Hydropower is expected to add another 3.5 GW once reservoirs fill.

The country's gas output stands at 4.1 Bcf/d against average demand of 5.6 Bcf/d, which spikes to 6.2 Bcf/d during the winter, the oil ministry source said.


Amid the power crisis, Pakistan State Oil has sought Rupees 50 billion ($507 million) in financial assistance from the government to help pay international oil suppliers including Kuwait Petroleum, a company official said, also on condition of anonymity.

Companies such as Hub Power, Kot Addu Power and Water, and Power Development Authority have paid around Rupees 145 billion to PSO against purchases of furnace oil.

The companies' late payments have forced PSO to reduce oil product imports, including furnace oil, high-speed diesel and gasoline, which has lowered the country's reserves, the PSO source said.

"We have furnace oil reserves of three to five days amounting to 40,000-45,000 mt, which has been a worry as consumption of the product would increase," he said. "The temperature has been rising in the country, resulting in lengthy hours of load shedding."

The PSO source said diesel and gasoline stocks were currently sufficient, however.

Pakistan's oil and gas sector has been caught in a spiral of circular debt since 2008 in which state-owned utilities defaulted on payments to oil marketing companies, who in turn, have been unable to pay refiners. As a result, the country's refiners have struggled to pay for crude imports, with a resulting decline in oil refining operations and upstream investments.

In addition, the country's cash-strapped electricity producers have often been unable to pay for fuel, leading to frequent power cuts.

--Haris Zamir,
--Edited by Meghan Gordon,

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