Pakistan’s gas crisis
Resort to piped import of gas has been delayed because of global politics and uncertain pipeline transitions.
Pakistan is finally engulfed in a predictable crisis: the compressed natural gas (CNG) made available to transport is no longer available for a variety of reasons, the immediate one being the intervention by the Supreme Court in the price-determining mechanism. CNG was unrealistically cheap compared to petrol and efforts to equalise the differential between the two were too slow for political reasons. Populism on the parts of the Supreme Court and the media has complicated the issue. Resort to piped import of gas has been delayed because of global politics and uncertain pipeline transition in the region and in Pakistan.
Gas is not being consumed by the transport sector alone. It has been piped to households since the 1980s subject to heavy transit loss. It is used to produce electricity because Pakistan has gradually shifted from river water to gas together with other oil-based fuels. It is used for industry, too, especially in the crucial fertiliser sector. Because of the imbalance of consumption in the non-industrial sector, gas has not gone into power production for the industrial sector, causing power outages that has cut into the country’s capacity to produce exportable commodities. There is growing unemployment in the industrial sector in consequence with proportionate increase in crime and breakdown in law and order. Pakistan’s own ‘fiscal cliff’ is owed to the untenability of the energy sector.
Pakistan is the largest consumer of natural gas in South Asia. Its gas reserves are depleting fast because of the notoriously inefficient pipeline system subject to theft in Third World conditions. Nearly 40 per cent of gas being consumed in households and at gas pumps is subject to this loss, which puts further pressure on gas prices for consumers. Interference in price-fixing by the Supreme Court has caused the latest crisis of closure and non-supply. The CNG pump sector is conscious of its leverage after it has replaced a large percentage of oil import; and its total closure will mean more import of oil for which Pakistan may not have the needed dollar reserves.
Depletion of indigenous reserves of natural gas has plummeted. By the mid 1980s, the power sector was converted to the extensive supply of this gas. It displaced other fuel sources to emerge as the dominant source in the energy mix. By 2009, its share in the energy supplied stood at 48.03 per cent and was accounting for 34.3 per cent of the electricity generated. By 2007, the per capita gas consumption had ranked ahead of all South Asian states. Additionally, according to the International Association of Natural Gas Vehicles, as of December 2008, Pakistan has the world’s highest number of vehicles running on CNG. Since 2008, Pakistan has been turning its face away from the impending collapse of its energy sector.
The Musharraf regime postponed tackling the crisis and decided to subsidise rather than pay up. Resultantly, a mountain of unpaid bills was bequeathed to the government that succeeded it. If General Pervez Musharraf (retd) was not able to build the dams that could have relieved pressure on gas, the PPP in power was even less able to get the dissenting provinces to agree to the Kalabagh Dam. Politics stepped in: if you support the Kalabagh Dam in Punjab despite the rebellion in other provinces, you are bound to get Punjabi votes.
The damage is done. If the PPP loses in the coming elections, it will be in large part as a result of the scenes of consumer suffering in the energy sector, the rickshaw-walas and the factory workers of Faisalabad. It no longer matters if the PPP wakes up and acts realistically in the face of an improvident judiciary; it is most likely to lose anyway. Islamabad, divided institutionally, is still thinking of equalising gas-petrol prices rather late in the day. The untapped gas reserves in Sindh and terror-stricken Khyber-Pakhtunkhwa will remain untapped and Bhasha Dam unbuilt because of the isolationist passions being encouraged at a time when flexibility and tact are needed more to persuade the world to come and help with our finances.
Published in The Express Tribune, December 9th, 2012.
Gas is not being consumed by the transport sector alone. It has been piped to households since the 1980s subject to heavy transit loss. It is used to produce electricity because Pakistan has gradually shifted from river water to gas together with other oil-based fuels. It is used for industry, too, especially in the crucial fertiliser sector. Because of the imbalance of consumption in the non-industrial sector, gas has not gone into power production for the industrial sector, causing power outages that has cut into the country’s capacity to produce exportable commodities. There is growing unemployment in the industrial sector in consequence with proportionate increase in crime and breakdown in law and order. Pakistan’s own ‘fiscal cliff’ is owed to the untenability of the energy sector.
Pakistan is the largest consumer of natural gas in South Asia. Its gas reserves are depleting fast because of the notoriously inefficient pipeline system subject to theft in Third World conditions. Nearly 40 per cent of gas being consumed in households and at gas pumps is subject to this loss, which puts further pressure on gas prices for consumers. Interference in price-fixing by the Supreme Court has caused the latest crisis of closure and non-supply. The CNG pump sector is conscious of its leverage after it has replaced a large percentage of oil import; and its total closure will mean more import of oil for which Pakistan may not have the needed dollar reserves.
Depletion of indigenous reserves of natural gas has plummeted. By the mid 1980s, the power sector was converted to the extensive supply of this gas. It displaced other fuel sources to emerge as the dominant source in the energy mix. By 2009, its share in the energy supplied stood at 48.03 per cent and was accounting for 34.3 per cent of the electricity generated. By 2007, the per capita gas consumption had ranked ahead of all South Asian states. Additionally, according to the International Association of Natural Gas Vehicles, as of December 2008, Pakistan has the world’s highest number of vehicles running on CNG. Since 2008, Pakistan has been turning its face away from the impending collapse of its energy sector.
The Musharraf regime postponed tackling the crisis and decided to subsidise rather than pay up. Resultantly, a mountain of unpaid bills was bequeathed to the government that succeeded it. If General Pervez Musharraf (retd) was not able to build the dams that could have relieved pressure on gas, the PPP in power was even less able to get the dissenting provinces to agree to the Kalabagh Dam. Politics stepped in: if you support the Kalabagh Dam in Punjab despite the rebellion in other provinces, you are bound to get Punjabi votes.
The damage is done. If the PPP loses in the coming elections, it will be in large part as a result of the scenes of consumer suffering in the energy sector, the rickshaw-walas and the factory workers of Faisalabad. It no longer matters if the PPP wakes up and acts realistically in the face of an improvident judiciary; it is most likely to lose anyway. Islamabad, divided institutionally, is still thinking of equalising gas-petrol prices rather late in the day. The untapped gas reserves in Sindh and terror-stricken Khyber-Pakhtunkhwa will remain untapped and Bhasha Dam unbuilt because of the isolationist passions being encouraged at a time when flexibility and tact are needed more to persuade the world to come and help with our finances.
Published in The Express Tribune, December 9th, 2012.