Shale gas extraction policy: ADB advises Pakistan to realise implications on other sectors

Will provide $900m for power sector’s expansion during the next two years.

ISLAMABAD:

What should have been a national narrative was advocated by the Asian Development Bank (ADB) that Pakistan first needed to realise adverse implications of water-intensive shale gas extraction policy on the agriculture sector and expensive Thar coal on the economy.

The comments made by the visiting ADB’s Regional Director on Energy, Rune Stroem on Wednesday highlighted critical flaws in the decision-making.

The government approved the shale gas policy last week after being pushed by the Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain.

Stroem said it was Pakistan’s choice when it came to choosing between water allocations to shale gas versus the agriculture sector and using cost-efficient cheaper imported coal against what he claimed was more expensive coal from Thar that was not environment-friendly. But, it should be done after productive and fact-based dialogue, which was unfortunately missing from it presently.



The agriculture sector contributed 22% to the national economy in addition to employing over 40% of the total workforce.

According to energy experts, extraction and use of shale gas affects the environment due to leakage of extraction chemicals and waste into water supplies. Shale gas’ extraction process emits greenhouse gases and causes pollution.

Stroem said shale gas extraction required large amount of water and water reserves of Pakistan were not accounted for before approval of the policy. He said the technology used in shale gas extraction consumed tremendous amount of water besides huge requirements of funds for research and development. “Being a water-scarce country, Pakistan should employ water-efficient technology as shale gas water requirements are part of the overall equation,” he added.

A shale gas explorer hired to extract the resource may pay the price of water, but the question was can a farmer afford to pay when water gets scarce. He hoped that a water sector report approved by the cabinet last week will also help trigger a wider debate over the value of water and its efficient usage.



While commenting on the issue of consumption of Thar coal in Jamshoro power plant, ADB’s energy division director said the relevant economic analysis aiding in decision to either rely on Thar coal or imported coal was missing.

He said the issue was not to choose between imported and domestic coal but between cost effectiveness versus expensive and environment degradation and cleanliness.

He said that to produce equal amount of electricity, the indigenous lignite coal requirements were four times more than the requirement of the imported bitumen, which was very cost effective.

The ADB’s Country Director for Pakistan Werner Liepach said Thar coal reserves were located far away from the Jamshoro power plant, thus Pakistan should also account for transportation costs, which were four-times higher.

“Timing is an essence as the country is facing serious energy crisis and decisions should be taken to address the crisis immediately,” he added, while highlighting that Thar coal’s extraction was yet to commence.

ADB’s findings show that by converting the thermal-based Jamshoro power plant to coal will save the country $500 million annually.

Liepach said the ADB will give $900 million for expansion of the Pakistan power sector during the next two years while urging the government to introduce much-needed reforms necessary for rehabilitation of the energy sector.

While commenting on the current fluid economic situation, Liepach said Pakistan was facing a very difficult situation. The energy crisis and plunging foreign investments were very critical issues facing the country and until these are resolved economic growth cannot pick momentum.

Published in The Express Tribune, February 28^th, 2013.

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