Demand for electricity, gas, oil drops dramatically

ISLAMABAD: Demand in the country for electricity, natural gas and petroleum products has dropped dramatically as a result of the coronavirus epidemic, creating serious operational and financial challenges in the supply chain.

Senior government officials told Dawn that electricity consumption had plummeted by almost 30 per cent and authorities had been compelled to provide uninterrupted power supply to even high-loss areas to maintain frequency. For example, the total power demand went down to about 8,500MW on Monday against 12,500-13,000MW projections based on actual consumption last year.

These sources said the consumption of electricity in January and February was almost in line with projections of almost 11,500-12,000MW. In contrast, the March consumption has stood around 10,000-10,500MW against projections of about 15,000MW made by the power system operator.

An official said the projection for April was about 18,000GW but it was unlikely to be achieved given the current situation.

He explained that not only the Covid-19 but recent rainy spell had also affected the power demand but major reduction was caused by the lockdown, forcing industries, offices and commercial activities to shut down. This was resulting in higher capacity charges and would ultimately affect the consumer tariff and cause cash flow problems for power companies.

Likewise, gas consumption had plunged by about 40-50pc and linepack of the gas network was in critical levels due to reduced off-take by consumers. This is despite a significant cut in liquefied natural gas (LNG) imports as recipient companies faced liquidity damages and demurrages.

Officials said the total gas sales in recent days had come down by half. For example, the LNG sales in the Sui Northern Gas Pipelines Ltd (SNGPL) network — Punjab and Khyber Pakhtunkhwa — dropped to just 430 million cubic feet per day on Monday against projections and arrangements of about 800mmcfd.

In overall terms, the gas injection in the SNGPL system stood at about 1,420mmcfd on Tuesday against total sales of about 1,400mmcfd which meant surplus supplies were flowing into the system. This is raising safety challenges to the gas pipeline network.

The power system was currently drawing about 275mmcfd for electricity generation against almost double the quantity in the same days last year. The gas consumption in industrial sector had dropped to about 130mmcfd against its earlier projection of about 260mmcfd, which meant half of the industry was currently closed down.

Also, the CNG sector was consuming only 15mmcfd gas against its projections of 40mmcfd. The only hope for the gas companies at present was the operationalisation of fertiliser plants. The power sector had placed orders for LNG supplies for April at 450mmcfd which also appeared uncertain in the evolving circumstances while import orders were already in place.

The petroleum division officials said the import vessels from Qatar had been curtailed to 3 from 5 to cope with the situation. They said there were demands in certain quarters for declaration of force majeure in LNG and IPPs contracts but that was not an option under consideration because of its adverse consequences for the country in the long run.

An official said the government was in contact with its energy suppliers to address challenges in an inclusive manner and ensure win-win for all instead of fighting cases in international courts, adding the force majeure did not absolve a party of its obligations but could only secure a delay.

Moreover, the consumption of petroleum products apparently faced more than 60-70pc cut as public and private transport came almost to a standstill following lockdowns announced by the provincial governments to keep their citizens indoors.

Even, the railways passenger traffic was stopped and freight movement drastically reduced as the need for movement of oil products declined and left the Pakistan Railways only with coal and limited transportation of a few other commodities, said an official. The Railways had to resort to about Rs6 billion injection from the federal government to meet salary obligations of its staff.

Officials said the consumption of petrol and high speed diesel had dropped by 60 to 75pc respectively over the last two weeks as provinces started announcing lockdowns. High Speed Diesel consumption has suffered more than petrol, he said.