Oil contribution in energy mix grows to 31%

Dependence on expensive imported oil rises to 84%.

KARACHI:

The share of oil in Pakistan’s energy mix increased to over 31 per cent in fiscal 2010, from 29 per cent in fiscal 2005.

The energy mix continues to move away from indigenous resources, such as gas, and towards expensive imported oil, according to the recently issued Pakistan’s Energy Yearbook 2010.

The country’s energy consumption grew by 3.8 per cent during fiscal 2010, while primary energy supply, on the other hand, rose by a minuscule 0.8 per cent. Widening of the energy demand-supply gap continues to be the biggest threat to the economic growth, Topline Securities said in a research note.

Reliance on imported oil

The country’s primary energy supplies rose to 63.1 million tons of oil equivalents in fiscal 2010, compared with 62.5 million tons in the previous year.

Additionally, the volume of imported oil in total oil consumption increased to 84 per cent, compared with 82 per cent and 81 per cent in fiscal 2009 and fiscal 2008, respectively.

The shift towards expensive imported oil has increased the country’s vulnerability to an uncontrollable commodity shock as witnessed in fiscal 2008, added the report.

Consumption up by 3.8%

After adjusting transmission and system losses and non-energy use, final energy consumption of the country during fiscal 2010 rose by 3.8 per cent, compared with 62.6 million tons in the preceding year.

Reduced gas supply to power sector

The rising gas shortage resulted in the government prioritising the domestic and transportation sectors, at the expense of power sector. During fiscal 2010, gas allocation to the power generation sector declined by a significant 12 per cent, which caused power outages throughout the country.

As a result, gas contribution to thermal electricity generation declined to 44 per cent in the year, compared with 48 per cent in fiscal 2009 and 76 per cent in fiscal 2005. The residual has been picked up by oil, which contributed 56 per cent in fiscal 2010, compared with 52 per cent in fiscal 2009 and a mere 24 per cent in fiscal 2005.

Published in The Express Tribune, March 29^th, 2011.