The government is moving to aggressively increase domestic fuel allocations to the energy grid as a critical shortage of imported liquefied natural gas (LNG) threatens to trigger massive electricity price hikes and widespread blackouts. In a bid to stabilize the grid before the peak of summer, the gas supply to power sector may double amid LNG shortfall, rising from the current 85-90 million cubic feet per day (mmcfd) to approximately 160-170 mmcfd by early May.
This emergency reallocation comes as officials grapple with a volatile energy mix and a looming surge in cooling demand. The shift is designed to minimize the reliance on expensive alternative fuels, such as furnace oil and high-speed diesel, which would otherwise drive the fuel cost adjustment (FCA) to unsustainable levels for millions of consumers.
The strategy involves a high-stakes diversion of resources. To secure the additional volume, the government is weighing the political and economic costs of diverting gas away from residential users, the compressed natural gas (CNG) sector, and fertilizer plants. While an additional 20-25 mmcfd may be drawn from the CNG sector, the decision to impact domestic households remains a point of intense contention within the cabinet.
A Political Choice: Millions of Households vs. The National Grid
The tension surrounding these diversions was highlighted during a recent meeting of the special cabinet committee on petroleum prices and supplies. Power Minister Awais Ahmad Khan Leghari warned that without these diversions, the country faces a binary choice: exponential increases in electricity tariffs or “massive loadshedding.”
The political risk is significant. Diverting gas from residential consumers would affect more than seven million users, potentially sparking widespread public unrest. Yet, the ministry has framed the crisis as a choice between the “uproar of 7m gas consumers or 30m power consumers.” For those losing domestic gas, the only viable alternative for cooking is liquefied petroleum gas (LPG), though prices for LPG have already surged to more than double the rates set by the Oil and Gas Regulatory Authority (Ogra) due to inconsistent market enforcement.
The Financial Toll of Fuel Shifts
The urgency of the gas diversion is driven by the staggering cost difference between fuel sources. Without RLNG, approximately 5,000MW of efficient power plants in Punjab either become redundant or must switch to diesel, which is significantly more expensive. The cost gap between RLNG and high-speed diesel is estimated to range from Rs20-21 to as much as Rs50-54 per unit.
Furnace oil, while available in stocks exceeding 500,000 tonnes—enough for over 35 days of full requirement—remains a costly fallback. The power division noted that while the February FCA stood at Rs1.42 per unit, the May adjustment could more than double if furnace oil is used extensively to meet demand.
| Fuel Source | Estimated Cost/Impact | Availability/Status |
|---|---|---|
| RLNG (Imported) | Baseline (Efficient) | Critical Shortfall |
| Furnace Oil | Rs35-45 per unit | Stocks > 500,000 tonnes |
| High-Speed Diesel | Rs20-54 gap over RLNG | Expensive/Limited |
| Domestic Gas | Low Cost/Subsidized | Diversion planned to 170mmcfd |
Infrastructure Bottlenecks and Summer Demand
The government’s ability to increase supply is partially aided by the completion of a new pipeline enabling flows from the Bettani gas field in Lakki Marwat, Khyber Pakhtunkhwa, into Punjab. However, these gains are offset by failures in other sectors of the energy infrastructure. The 969MW Neelum-Jhelum plant remains out of order, and Wapda continues to face delays with tunnels 4 and 5 at the Tarbela dam, limiting the potential for hydropower to fill the gap.
The timing is critical. Current peak hour demand is below 14,000MW, largely due to an increased reliance on solar power during the day. However, as summer peaks approach, demand typically climbs to between 27,000MW and 28,000MW. The grid is most vulnerable at night when solar generation vanishes and the national grid must carry the full load.
Impact on the Agricultural Sector
Agriculture remains a sensitive variable in this equation. The government intends to protect gas supplies to fertilizer plants to prevent a spike in urea prices. Currently, a wide price gap exists between locally produced urea at Rs4,500 per bag and imported urea at Rs15,000 per bag, a disparity that officials warn creates a high risk for smuggling.
Despite this, fertilizer plants may not receive uninterrupted supplies and could be forced to operate on an alternate basis to ensure the power sector can maintain basic stability.
What to Expect: Loadshedding and Conservation
Despite the efforts to double the gas supply, some level of power instability is now considered inevitable. The government has already implemented at least two hours of daily loadshedding, and this is expected to increase to an average of two to three hours daily as temperatures rise.
To mitigate the crisis, “hybrid load management” strategies have been introduced, including orders for early market closures to conserve electricity during peak evening hours.
The National Coordination and Management Council, led by General Zafar Iqbal, has now taken over the coordination of these efforts to ensure that the most critical economic sectors maintain power at affordable rates while managing the inevitable shortages.
The next critical checkpoint will be the May fuel cost adjustment announcement, which will reveal the actual financial impact of the furnace oil usage and the success of the Bettani gas field integration.
Do you consider the government should prioritize residential gas users or the wider power grid? Share your thoughts in the comments below.
