Solar plan could save $2 billion a year in LNG imports, expert says

ISLAMABAD: An energy expert claims he has a realistic and workable plan to slash the country’s reliance on liquefied natural gas imports by up to 50 percent gradually in the next three years and reduce its massive power sector debt by using solar energy.

Eng Arshad H Abbasi, co-Founder of Energy Excellence- Center NUST, Engineering University Peshawar said he has been demonstrating his innovation at his own home, where he does not use gas from the national grid, for the past two years.

Abbasi said he wanted to replicate this smart solar model across the entire nation, without any investment or expenditure from the government.

“I will attempt to reduce the capacity charges —which is currently Rs 1.3 trillion due to idle power plants—to nearly zero by employing smart strategies. However, the key component of my plan is that the GOP will not make any investment or expenditure of any kind,” he said in a letter to the country;s army chief.

Abbasi said he is going to present his action plan to the UN Development Program (UNDP) to get the government to receive millions of dollars in carbon credits, as his model will help to fulfill the country’s ambitious target of an overall 50 percent reduction of its projected emissions by 2030.

"Applying my model to discount houses from the gas grid will be a NET ZERO transition, which will also be a massive economic opportunity for investors. With the UN's help, I have no doubt that other countries will replicate this Pakistan-made model."

He said Pakistan's economy is heavily dependent on the energy sector, making it one of the most formidable challenges. Pakistan's energy sector is on a collision course with circular debt. The current circular debt included Rs2,300 billion for the electricity sector and totaled Rs4,500 billion without interest payments.

A few days ago, the government announced a massive hike in gas tariffs, which would raise them to 193 percent for households and various economic sectors to reduce the current total circular debt for the entire energy sector.

The finance minister announced on November 15, 2022, that gas prices will rise in January 2024 as a result of Pakistan informing the IMF about the power tariff review. Because industrialists are expected to adjust their product prices to pass on the impact of high costs to end-consumers, this unprecedented hike in gas tariffs will accelerate the already high inflation to 24.5 percent in the current fiscal year.

“It is a hard fact that domestic gas production is only 72 percent self-sufficient, and natural gas production is declining by about 7 percent a year at the same time. In October 2023, $355 million worth of LNG was imported to close the demand gap. In this grim situation, I am coming up with an innovative solution, which with just one click, I can initially cut costs of LNG import by at least $24 million, or Rs 7 billion, yearly. I can, however, cut the import of costly LNG up to 50 percent gradually in the next 3 years if given the opportunity. This entails reducing the Power sector's circular debt in addition to saving $2 billion, or Rs 580 billion by cutting LNG import, yearly in the next 3 years,” Abbasi said.

"The fact that natural gas production is falling by roughly 7 percent annually and domestic gas production is only 72 percent to meet the demand. To make up for the shortfall in demand, $355 million worth of LNG was imported in October 2023. Given the dire circumstances, I am devising a novel solution that, with a single click, will enable me to reduce LNG import expenses by a minimum of $24 million, or Rs 7 billion, annually."

"Nonetheless, if he is given the chance, he can progressively reduce the import of pricey LNG by up to 50 percent over the course of the next three years. This means that in addition to saving $2 billion, or Rs 580 billion, annually by reducing LNG imports, the Power sector must reduce its circular debt."