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Addressing the gas
shortage to spur economic growth
By
M. Osman Ghani
Four regional
countries, namely Turkmenistan, Afghanistan, Pakistan and India along with
the Asian Development Bank (ADB) took a historic step recently-when they
finally inked an agreement on 11th December, 2010 for implementing the
long-waited Tapi gas project of over $7.6 billion, to help the gas deficit
countries of the region, including Pakistan to overcome their
difficulties. Pakistan is in dire need to meet its galloping gas shortages
as early as possible. Pakistanis are now the major consumers of this
natural fuel. Vast majority of city dwellers are directly dependent on
natural gas for its multiple uses, ranging from kitchen burners, gas
heater, geysers and for running the increasing number of vehicles with
compressed natural gas (CNG) cylinders.
On the other hand, the country’s industrial establishments are
also critically dependent on the un-interrupted supply of gas.
In 2008-09, share of gas consumption stood at 43.7 per cent in the
total energy mix of the country, followed by oil (29 per cent),
electricity (15.3 per cent) and coal (10 per cent).
The share of gas in the energy mix has been increasing very
sharply. From 2004 to 2009 the consumption of gas in the total energy mix
has jumped by 9 percentage point. The
demand for natural gas has surged by almost 10 per cent annually from
2000-01 to 2007-08, reaching around 3,200 mmcfd, against the total
production of about 3,000 mmcfd, according to the Ministry of Petroleum.
During 2008—09, the demand exceeded the available supply, with
production of 4,528 mmcfd against a demand for 4,731 mmcfd, indicating a
shortfall of 203 mmcfd.
The consumption of gas
by the industrial sector has also witnessed a significant rise over the
years. For example, during
2009-10 industries consumption of gas swelled by 5.3 per cent mainly due
to an increase in domestic demand for manufacturing production.
On the other hand, there are a number of areas and sectors
including the vast rural areas, manufacturing, transport and communication
sectors where gas demand remains unmet due to supply shortages.
Many gas-dependant
manufacturing units are on the verge of a shutdown due to its deficiency.
The textile millers in various cities of Punjab have given seven
days to the federal government to restore gas supply to their units, which
has been suspended, jeopardising the monthly $800 million textile exports
target in Punjab alone. All Pakistan Textile Mills Association (APTMA)
Chairman of the Punjab Chapter, Ejaz Gohar has recently said that about
13,000 industrial units in Punjab have been closed down due to cut in gas
supply. The badly affected
industries are textiles, ready-made garments and food manufacturing.
Meanwhile, the CNG sector, has assumed unprecedented importance in
the country due to rapid transformation from petrol-based to gas-based
running of private and commercial vehicles.
Frequent closure of CNG stations is only escalating hardships of
the people. The people are
also facing rising transportation costs due to rise in CNG charges.
Sui Southern Gas Company (SSGC) has also decided to suspend gas
supplies to the CNG stations in areas of Sindh and Balochistan for two
days in a week, in a bid to cope with soaring gas demand.
This would aggravate problems for the people of those areas.
The supply constraints of various other energy components are also
responsible for gas load shedding and price hike in the country.
Consumption of gas by
various sectors is given in the table below:-
Interrupted gas supply
to the domestic and industrial consumers and refueling stations has now
become a burning issue in Pakistan. The
country is facing gas supply cuts due to a widening supply-demand gap. It is being apprehended that the crisis will worsen in the
next few years with the gas shortfall likely to double to more than two
bcfd. The gap between demand
and supply presently stands at around one bcfd which would go up to 2.1
bcfd by next year. The
shortfalls would enhance by more than 300 per cent to 6.5 bcfd by 2020.
Sky-rocketing costs of
electricity and gas were already creating massive inflationary pressures
in the country, putting extra burden on the poor consumers and the
economy, at large. Rapid
increase in power and gas tariffs has also raised the cost of doing
business and consequently, a number of small and medium sized units are on
the verge of closure. Business
community wants the government to extend support to industries, especially
the textile value-added sector in the form of lower utility and capital
costs.
According to a reliable
report Pakistan’s natural gas production is estimated to level off by
2011 and in 2030 more than 70 per cent of domestic demand for natural gas
will have to be met through imports or new discovery.
To meet the demands of natural gas several options were under
consideration by Pakistan; including pipeline projects from Iran and
Turkmenistan to ensure cheap gas supply to domestic consumers.
The government was also considering importing liquefied natural gas
(LNG) from countries like Qatar and Australia.
Natural gas remains a major asset for Pakistan.
According to the World Fact Book, Pakistan had proven natural gas
reserves of 0.89 trillion cubic meters in 2009, with the major
gas-production fields being Sui in Balochistan, Mari and Kadirput in Sindh.
But this modest reserve is not enough to meet the growing demands
of the country in the near future.
Timely completion of
Tapi pipeline and flow of natural gas through this pipeline to the energy
deficit Pakistan is a feasible option.
Construction of the pipeline is likely to commence soon and may be
completed by 2013-14. The
project would help overcome Pakistan’s growing energy crisis that is
causing widespread resentment and protests across the country.
Pakistan and Iran have
also signed a gas sales purchase agreement, which binds both the countries
to meet certain targets for realisation of the project.
Pakistan will import 750 mmcfd of gas from Iran.
Iran has reportedly started construction work on the proposed
pipeline in its territory but in Pakistan a take-off in construction
activities is still awaited. Both
the pipeline projects are essential to meet the energy demands of the
country. Pakistan is already spending about $10 billion per annum to
import costly oil. The gas
pipeline projects will surely provide a much cheaper alternative. Cheap and abundant energy will help the country in achieving
rapid economic growth. However,
for versatile and diversified supply of energy, the country should
concurrently develop indigenous sources of energy, for which it has
limitless potential.
Consumption of gas in
Pakistan
(Billion cft)
Year
Household
commercial Cement
Fertilizer
Power
Industrial
Transport
2007-08
204.0
33.9
12.7
200.1
429.8
322.6
72,018
2008-09
214.1
35.5
07.3
201.1
404.1
319.0
88,236
2009-10
184.5
28.6
01.7
162.5
264.8
246.1
71,225 *
* July-March
Source: Pakistan
Economic Survey
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