The federal government is preparing to change the gas supply priority order to elevate the export industry to first place alongside the domestic and commercial sectors, while the captive industry will be treated equally with the CNG sector.
In September 2005, the Cabinet’s ECC adopted the “Natural Gas Allocation and Management Policy 2005” in order to maximize the use of the country’s available natural gas.
Section 4 of the aforementioned Policy establishes a merit order for gas supply to various customer groups during periods of high demand and/or inadequate supply. The priority order has changed several times.
According to reports, the Cabinet’s ECC approved the proposed natural gas load management program on January 29, 2013, after reviewing a summary submitted by the former Ministry of Petroleum and Natural Resources (now Ministry of Energy, Petroleum Division) and allowing gas utility companies to manage gas load on their own in accordance with approved policy/priority orders.
Following directives from the Cabinet’s Export and Non-Export Committee in September 2018, the industry was divided into export and non-export sectors. Budgeted support for the export industry was given at the RLNG set at $6.5 per mmbtu; this amount was then increased to $ 9 per mmbtu for FY 2023.
Subsequently, on July 1, 2023, the subsidy was stopped, and industry was given the option to use a combination of indigenous and RLNG in accordance with an ECC decision from November 2023.
The difference between export and non-export industries was eliminated in February 2024, and new categories for industries (process) and captive power were established.
There are now 1180 captive units (export), of which 383 are on the SNGPL system and 797 are on the SSGCL network. The combined systemic indigenous gas consumption of both gas utility companies is estimated at 242 MMCFD, of which 59 MMCFD is used on SNGPL’s network and 183 MMCFD on SSGCL’s. 42 MMCFD on SSGCL and 114 MMCFD on SNGPL make up the estimated 156 MMCFD RLNG use.
According to the reports, the government has consistently supported the industry’s use of gas for value addition. To ensure uninterrupted production, the sector, however, preferred to employ gas for power generation due to concerns about grid reliability and rising electricity prices.
Also, gas-powered power generation was less expensive than grid-based energy tariffs. As a result, the industry invested in transforming its power generating units into cogeneration units, which produce steam that is needed for process usage in the manufacturing cycle in addition to power.
