Gas liberalization.

AFTER drawing much criticism from both consumers and the opposition over its mismanagement of the energy sector that has resulted in crippling gas shortages this winter and expensive LNG imports, the government appears to have sped up its efforts to liberalise the gas market with the induction of private companies. On Thursday, Ogra permitted two firms to 'build virtual (gas) pipelines' to supply imported LNG to large industrial consumers including textile mills and fertiliser plants, power producers, CNG owners and others in or outside the networks of the two state-owned gas utilities. These companies will import their cargo through Gwadar and Karachi before transporting it to customers across the country in bowsers. A couple of days before, the regulator had issued gas marketing licences to two other companies to build their own LNG terminals. Until they complete their terminals, which will not be before at least 2023, these firms will use the excess RLNG handling capacity of the two existing terminals at Port Qasim. Both terminals have a combined capacity of handling 1.3bcfd of LNG with 1.2bcfd of it underwritten by the government, which pays hefty capacity charges to the terminal operators, mostly without utilising the capacity.

By selling its unutilised capacity to private marketing companies, especially during summers when residential gas demand is at its lowest, the government would be able to save a lot of money in capacity payments to terminal operators. That will help it reduce the consumer price of LNG and cut its losses on subsidy at the same time. Besides, the liberalisation of the gas...