LAHORE - Government should focus on eliminating the Unaccounted for Gas (UFG) which constitute to around 12pc of the total 4.3 billion cubic feet (BCFD) gas production of the country. Every year around 516 MMCFD gas out of total 4.3 BCFD is stolen by different sectors and gas theft has increased substantially after the mushroom growth of CNG sector in the country. If the government curtails/minimizes these gas losses in the country, the current gas crisis can be brought under control without reducing supplies to any sector at all.

The ‘system inefficiencies’ in SNGPL and SSGC distribution networks are the crux of the problem and have never been addressed properly. Sources said that government should carry out energy efficiency audit across the board to audit every single sector of economy using natural gas including the domestic consumers who waste lot of gas using inefficient equipments.  Fertilizer industry sector is the ‘most energy efficient in comparison to others which include power sector (Including Government operated Power Generation Companies Genco’s, IPPs etc), industries and CNG sector.

At this stage Government should focus on cost benefit analysis of using gas for different sectors of economy. Enhancing energy efficiencies of different sector is a medium to long term initiative which requires substantial investments and incentives at the policy level with clear and tangible benefits to those who comply and penalties on those who don’t, sources added.

Fertilizer industry sources while quoting a comprehensive research report prepared by International Resources Group for the Asian Development Bank and the Ministry of Planning and Development Government of Pakistan informed that, “The System Level Economic Valuation indicates that reducing gas to the fertiliser sector costs the economy Rs196 million per mmscfd, while increasing gas to the power sector costs the economy Rs98 million per mmscfd,”.

The plant level comparison between fertilizer and power plants show that using 100 mmcfd for fertiliser saves Rs29.4 billion compared to fertiliser imports, while replacing 100 mmcfd for power saves Rs6.4 billion compared to heavy fuel oil imports. Thus, using natural gas for fertiliser has a higher savings relative to using it for power generation by Rs23 billion. This compares well with the value from the economic model, which for use of 100 mmcfd in the fertiliser sector gives a net benefit of Rs19.6 billion.

Sources said that the team working on the report applied two approaches: an energy system economic analysis, and a plant-level comparison. Both approaches gave a similar result, which is that natural gas has a higher economic value for fertilizer production. The energy systems analysis shows that reducing gas to fertilizer and increasing gas to power both increase energy system costs. The plant-level analysis shows that importing fertilizer has a greater economic cost than that of importing heavy fuel oil for power generation.

Fertilizer industry sources believed that using gas for producing urea is the most efficient and judicious usage as fertilizer sector is not just burning the gas to run the plants alone, it offers maximum value addition by converting the raw gas into precious urea grains and country hugely benefits from this import substitution. Gas should be provided as priority to the sector which creates maximum value addition. Fertilizer is the only sector which has zero per cent ratio of Unaccounted for Gas (UFG), it never defaults on its payment obligations to gas utilities which are positive for cash flow of SNGPL/SSGC. Fertilizer sector is also one of the highest tax paying sectors of the economy in private sector of Pakistan.

All other industries have alternative fuel options except fertilizer sector that uses gas as raw material to produce the key farm input, urea, for the farmers that ensure food security of the masses as well as provide raw material to important industries like textile and food processing.