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Hammad Azhar and Miftah Ismail lock horns debating energy crisis!

As the government's representative defended the current policies of Imran Khan's government and made the case that the current crisis is insignificant, and is being unnecessarily politicized, the former minister accused the government of being inefficient managers of the economy, and of trivializing the current energy crisis in the country.

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On 28th June 2021, two former finance ministers of Pakistan went head-to-head discussing Pakistan’s energy shortage today, and the reasons for such shortage.

Pakistan is facing a gas crisis where the major industry is suffering due to LNG shortage. Reportedly, from 29th June to 5th July, the gas supply would be compromised.

The government has been claiming that the gas would be unavailable for only two days, and from the third day the supply would be resumed in phases, and by the 6th of July, the supply would return to its normal levels.

SNGPL claims that this is due to the unplanned dry-docking. The letter by the FPCCI to the government says that the Kunar Pasakhi and Gambat plants are already compromised due to alleged yearly repair work.

This has led SNGPL to cut the supply to industries in the three major provinces namely Punjab, Sindh, and Khyber Pakhtunkhwa.

This development had led to the former Finance Minister Miftah Ismail to challenge the Minister for Energy Hammad Azhar to a debate and it was accepted, and both decided to go head-to-head on Geo’s show, “Aaj Shahzeb Khanzada Kay Sath”.

Arguments

The debate started with the government side represented by the Federal Energy Minister giving some clarifications on the opposition’s arguments that the government has mismanaged the drydocking and SSGC has been deprived of the gas, leading to industrial shortages at high export times in June for the first time in history.

Hammad Azhar said that the current SSGC supply cuts have nothing to do with the drydocking, and the supply cut had to be done in summers, otherwise the loss would have increased due to domestic load in the winter season.

Read More: Cabinet Committee on Energy expected to resolve the Inter-Ministerial Deadlock on Monday

The minister added that the Kunar Pasakhi Deep (KPD) gas field would be brought online on 29th June and drydocking would not impact the SSGC supply as the total SSGC system is based on 1150 MMCFT and only 75 MMCFT is impacted by the drydocking.

He further said that the previous government’s gas plant kept running on 50 percent capacity due to not ordering the RLNG, and many government plants were not shifted to RLNG. He said that the incumbent government’s capacity utilization is 83 percent compared to 66 percent in the PMLN’s regime.

The former finance minister replied to the energy minister’s claims by saying that the PTI government over the past 3 years, has been unable to increase pipeline capacity, terminal capacity, or terminal ships. This govt has caused gas load-shedding in the month of June (a first in Pakistan’s history) and is buying expensive LNG and furnace oil.

Mr. Ismail added that only a few months ago, PTI was saying PMLN brought too much gas & there are too many power plants in Pakistan. Today, there is both gas and electricity load-shedding. PTI is buying gas for $12 at the spot today compared to $6-$7 in contracts signed by PMLN.

The former minister also claimed that the export industry is working at 50 percent capacity and the local is shut down in Sindh.

Hammad Azhar replied to these claims and said that only 15 percent gas curtailment is happening at SSGC, and the suppliers have been instructed to supply full capacity to exporters. He also added that this shortage is due to routine maintenance which happens in summers annually, and nothing unique.

The energy minister said that two of the terminals are impacted due to NAB cases and the ongoing international litigation. Similarly, the Bureau Veritas, international testing, inspection, and certification organization has disallowed the government to operate FSRU post 30th June, or it would be a violation of international law. This dry-docking has to be done twice in 15 years, Mr. Azhar claimed.

Replying to the allegation regarding the expensive buying of gas, made by Former Finance Minister Miftah Ismail, minister for energy said that the former government signed a contract of 13.7 percent, and the incumbent government has signed the contract of 10.4 percent. If the price of Brent oil remains the same for the next ten years, Pakistan would save Rs500 billion due to this highly feasible contract.

The minister said that the long-term contracts are done in percentages, and the incumbent government’s contracts are cheaper in that sense. He said that even the spot rate was less than the 13.7 percent contracts signed by the PMLN government.

Read More: Planning division says export sector should not be given gas subsidies

The former minister said that all the regional governments at the time when PMLN signed the contracts, bought the gas at rates higher than 13.7 percent, referring to India and Bangladesh, thus the PMLN government bought it cheaper compared to others at that time. He mentioned other contracts that were cheaper as well.

The former finance minister said that the LNG plants were very cheap and efficient, and the incumbent government is not using them properly.

The energy minister replied to the allegation made by the opposition that even after contracts, the PTI government isn’t able to secure gas, by saying that the current 10.4 percent contract would be applicable from 2022 onwards, and before this is done, the government is stuck with the expensive contracts made by the PMLN government.

Other arguments were made regarding the NEPRA report 2020, capacity costs and energy-related financial regulations were made.

Reactions

No matter who won the debate, Twitter appreciated a constructive debate on TV, despite the political inclinations of people.

Assistant Secretary-General PMLN, and Formerly JPMorgan Bilal Kiyani, listed out all the arguments made by the former minister, declaring him a winner.

Similarly, the government side also declared Hammad Azhar a victor. Special Assistant to Prime Minister of Pakistan on Political Communication implied that when PTI chose a specialist to talk on the Economy, the opposition failed to win the arguments.

No matter whose arguments remained standing at the end of the debate, there is no doubt that more of these data-driven debates are much needed to build a constructive Econo-Political discourse in Pakistan.

Read More: Qatar captures the ‘very fast growing’ Pakistani LNG market

 

 

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