Gas load-shedding plan’s socio-economics

By Mehmood-Ul-Hassan Khan

The federal cabinet has recently adopted gas load management plan for the next four months. According to the gas load management plan, CNG stations will remain closed for eight days a month on rotational basis in the zones served by the Sui Northern Gas Pipelines Limited (SNGPL). The tentative dates for the implementation of the plan are from November 15th till March 15th, 2010.

It is hoped that through these integrated policy measures 25 mmcfd of gas (millions of cubic feet per day) will be saved which will be supplied to the domestic consumers. The cabinet also decided that an uninterrupted gas supply to the textile industry will be assured in the winter season. (see table-1)

The plan consists of saving gas by cutting it off in rotation to the manufacturing sector and the shutting down of the CNG industry two days a week. It is hoped that there will be no gas load shedding for the domestic consumers. Furthermore, no new industrial gas connections will be sanctioned from December 2009 to December 2010, nor will new cities and villages be provided supply, the exception being gas producing areas such as Balochistan.

Gas load shedding would have drastic multiplier effects such as the alternative use of fuel for continuing industrial production would enhance the production cost, further affecting the competitiveness of Pakistani products in international market. Not only will this affect the country’s productivity but also its exports and the inflows of investments as there would be a severe delay in meeting foreign orders. Vulnerable industrial workers, especially daily-wagers will have to face tough times as the industry braces itself for gas load management. More than 32 per cent of the total labour force consists of daily wagers, and their earnings and social life will be badly hit in Karachi. The local industry provides 60 per cent of the total revenue to the government and similar percentage of jobs to the people of Pakistan but it is feared that after gas load shedding, poverty and unemployment ratios would be high in the days to come. Further, inflationary pressures would be strong. The cost of transport will rise as fare rates will be higher which will badly affect the common people. If the ongoing gas shortage in the country is not overcome then the import bill of oil will increase as CNG is presently reported to replace a more than 2.7 billion litres of petrol/per annum. In NWFP, gas load management would further aggravate the falling industrial output in this province.

According to the SNGPL, Pakistan’s natural gas production soared by 25.2 per cent during the first half of 2008. Its total gas production reached 498,957 million cubic feet in 2007. Pakistan currently exports up to 6 million tonnes of liquid natural gas to many countries. The country’s 50 per cent energy requirement gets fulfilled from gas. It is feared that the main gas field at Sui, which still accounts for 40 per cent of the country’s needs, is estimated to run dry between the years 2020 to 2030. Shortage of around 500 to 700 mmcf per day, during the winter is expected whereas distribution companies' estimate is higher, i.e. around one billion cf per day. So, energy resources are getting bad to worse with the passage of each day. (see table-2)

According to the international association of natural gas vehicles (2009), Pakistan has surpassed Brazil and Argentina in the usage of CNG. Now, Pakistan has the largest number of CNG powered vehicles in the world. Pakistan also ranks the largest number of CNG filling stations in the world. The number of operational CNG pumps has increased to 17,000, while around 200 CNG pumps are being established and 4,000 investors have shown interest to set up fuel stations of CNG in 2009. The number of CNG-run cars have exceeded from 1.6 to 2.5 million during 2005-2007 throughout the country. The number of CNG filling stations has also grown largely in the country. The CNG-run vehicles stood at 10.5 million at the beginning of the year. Furthermore, private owners run around 70 per cent of CNG filling stations while 30 per cent are run by oil marketing companies (OMCs) in the country.

It is important for the government to search for other alternatives in such a situation of shortage of gas. Implementing the IPI i.e. Iran-Pakistan-India gas pipeline would be the first major step in the right direction. The proposed pipeline would provide 750 mcf per day which could produce 5,000 MW of electricity. Besides this, the Turkmenistan-Afghanistan-Pakistan [TAP] pipeline also known as the Trans Afghan Pipeline would supply natural gas from the Daulatabad fields in Southeast Turkmenistan to Afghanistan, Pakistan and then on to India. Power generation through optimal exploitation of renewable energy resources, like wind, solar, mini and micro-hydro and geothermal, would prove to be economically viable. Far reaching communities could be electrified through solar, wind, bio-mass and other renewable energy sources. Harnessing the alternative sources of energy, both solar and wind, despite the high initial installation cost, is the second best option after hydro power. The introduction and widespread use of solar water heaters would decrease the gas consumption in the winter season. The Thar coal field with the potential to supply the entire country’s energy needs should be started as soon as possible. In the long-term, the country needs to import regasified liquid natural gas (RLNG) to replace liquid fuel in the power sector. Most importantly, usage of high quality domestic gas appliances would be helpful because our domestic gas appliances have only 30 per cent efficiency which means 70 per cent of the gas used is wasted.

All the stakeholders strongly rejected the idea of gas load shedding floated by the government. Majority of them expressed serious concerns over the gas load management plan approved by the federal cabinet. The CNG association has threatened to go on an indefinite strike if it is not withdrawn immediately. The business community, manufacturing industry sectors also have been annoyed with the government’s latest suggestion that alternative fuels such as furnace oil and diesel be used on the two days that supplies are suspended. The Rawalpindi Chambers of Commerce and Industry (RCCI) and Islamabad Chamber of Commerce & Industry (ICCI) said that suspending gas to industries for two days would stall industrial growth, discourage investment, affect the country’s exports and give rise to inflation. Moreover, around 70 to 75 per cent vehicles including the public transport are on CNG in these cities, which would create problems for the industries and common people alike. Pakistan is passing through a severe energy crisis. It is feared that due to the recent announcement of gas load shedding, the CNG and all other industries would be in hot waters. Sincere efforts should be initiated to promote alternative energy sources in the country.

Region          Schedule of closure

Lahore, districts Kasur, Muridke, Sheikhupura          First two days

Islamabad, districts Jhelum, Attock,

Murree and Rawalpindi          Third and the fourth day.

Gujaranwala, districts Muridke, Kamoki, Sialkot,

Sarai Alamgir and the highways          Fifth and sixth day

Peshawar: The entire NWFP province,

except Hazara division          Fifth and sixth day

Multan, Abbotabad, Faisalabad and Bahawalpur          Seventh and the eighth day

Country          CNG-run vehicles

Pakistan          10.7 million

Brazil   1.42 million

          1.35 million

Source: international association

              of natural gas vehicles