CPPs' closure may increase gas companies' losses over Rs400 billion

Following the International Monetary Fund's (IMF) directions, the energy sector has transferred the industrial gas consumption burden to the national grid, which could result in a loss of over Rs400 billion for gas companies.

The consumption of Re-Gasified Liquefied Natural Gas (RLNG) also significantly declined.

“We generate Rs420 billion revenue per annum from the CPPs, this is how we are providing cross-subsidy of Rs100 billion to the industrial sector,” said the sources within the Energy Ministry.

According to the sources, at least 1,180 CPPs were working in the country, of which 797 were the consumers of the Sui Southern Gas Company, and 383 were purchasing gas from Sui Northern.

“If they go out from the system, the authority would have to face Rs420 billion loss, and it has to find new consumers, which use over 300 mmcfd gas,” it added.

Besides this, it said, it would be difficult to provide a subsidy of Rs100 billion to industrial consumers if CPPs close.

“After the IMF’s direction of switching the industrial sector to the national grid from the CPPs, we increase the gas tariff for the CPPs by 275 per MMBTU to Rs3000 from 2,750 per MMBTU to discourage the CPPs from gas consumptions,” sources quoted an official.

Meanwhile, the Power Division informed the Petroleum Division if the captive power plants were averted from buying gas from the SSGC and SNGC and the industrial sector was switched, the need for electricity consumption of the National Grid would increase to 4000 megawatts.