Engro Elengy Terminal Limited (EETL) has raised concerns about an imminent gas shortage for the duration of 60 to 90 hours from September 7 to 11. This raises many problems for the government and supply companies. Will they be able to cater to public, private and industrial demand? How will downstream agreements be honoured if there is a deficit of 1.6 billion to 2.4 billion cubic feet in gas supply? Can a larger capacity replacement terminal be brought in for the future? The government must address and provide solutions to each of these concerns as it navigates a way out.

The cause of the disruption in LNG supply will be the exchange of EETL’s Floating Storage and Regasification Unit. Supply companies like the Sui Northern Gas Pipelines Limited (SNGPL) have already expressed their reservations and explained the complexities of the downstream agreements that it had signed with various power plants previously. The estimate provided by the EETL goes well beyond the outages forecasted before the agreements were signed and provision failure is bound to not only result in hefty capacity payments and liquidity damages but also lead to a disruption in the supply of power across the country. The trickle-down effect of this on the industries may just be too severe. In the end, it is the masses that will suffer the most.

Another aspect to worry about is the problem of inflated prices and hoarding. As the winter approaches, the demand for LNG rises dramatically. To save themselves from loss, supply companies are bound to hoard LNG so that they can distribute it for as long as possible but that too at an inflated price, as is the pricing trend when there is a shortage of a commodity. This is bound to disenfranchise the public as not only will it have to create contingency plans for the absence of LNG but it will also have to suffer from exploitative pricing.

The economy and people of our country still rely on gas for a majority of their procedures and that makes the situation much more precarious. The government will have to consider all viable alternative routes and manoeuvre around this crisis extremely carefully.