Energy affairs

LAHORE: After two years of governance (bad) this government claimed that it has overcome most economic hurdles and put the country on the growth path. Yet the planners admit that there would be acute shortage of gas – the basic growth ingredient.

No economy can prosper if it faces shortages of energy and power that are needed in all economic activities from industry and agriculture to transport. The acute gas shortage in coming winter was shocking news also for domestic consumers.

It speaks volumes about the readiness of this regime to address bottlenecks in growth. The experts and ministers appointed by the prime minister in the energy and power ministries should have taken notice of the impending shortages.

Perhaps they were not aware of the fast depleting domestic gas reserves as well as the need to accelerate LNG imports to mitigate domestic shortages.

Public appeasing was on the back of their mind when they ignored to accelerate gas imports. India and Bangladesh have since long covered their domestic gas deficiencies through adequate imports.

The dilemma for our government is that it has kept the piped gas rates for domestic consumers much below the global rates. The LNG that government imports is four times more expensive than domestic gas price.

The government cannot dare to import expensive LNG and supply it to domestic consumers at imported price. It is supplying degasified LNG to the industries in Punjab at almost three times the rates it charges from Sindh and Khyber Pakhtunkhwa industries. It is though subsidising few exporting sectors on gas tariff.

What would the domestic consumers do in winter when gas would not be available? They would be forced to shift to liquefied petroleum gas (LPG) that is five times more expensive.

For the consumers that get gas through pipeline, the hassle of buying LPG cylinders (that are very heavy) is worrisome particularly if the kitchen is not on the ground floor. These cylinders are considered dangerous because majority are substandard.

The RLNG if imported in required quantity could overcome the shortage of domestic gas. The price would be substantially higher, but much lower than the price that people pay for LPG (mostly consumed by the poorest segments of society where piped gas is not available. The affluent use it in shortages only).

The price of RLNG could be lowered if it is mixed with the available domestic gas and average of the two is charged from all consumers.

To do this the government would first have to create awareness among all consumers that it is the only option. Higher LNG imports however would not be possible this winter.

This is not because there is any shortage of LNG in the global market. It is because our system has been made dysfunctional by the national accountability bureau.

It could target any purchase and claim that the LNG consignment was bought at higher than normal global rates.

The LNG is procured by governments the world over on long-term contracts of 5-10 years like the one signed by Shahid Khaqqan Abbasi with Qatar.

It is binding on both parties to supply and lift the agreed quantity on weekly or monthly basis. Default from any party carries high penalties.

There are floating stocks available in high seas carried by LNG ships that are offered for sale at prevailing prices. Any buyer can buy this LNG at spot price.

In the past, previous government did buy LNG from spot over and above the LNG it obtained from contract with Qatar government to address domestic shortages. The spot prices vary from ship to ship and from country of origin.

These purchases came under scrutiny of NAB. The planners in present regime would be hesitant to go this way as bureaucracy particularly would not risk coming under NAB radar some time later.

It is pertinent to note that gas is also a major source of generating electricity, and is used for other industrial purposes in our country. Currently, we are generating over 6,000MW power from RLNG plants.

The K-Electric also generates a major part of its power from gas. The entire textile industry is dependent on domestic or imported gas for power generation.

Shortage of gas would create havoc in our economy and would badly impact productivity.

Pakistan’s economy is already in a coma despite tall claims made by this government. For the past two years, GDP growth has remained elusive as well. The acute shortage of gas in winter would not help the cause of economic growth.