Dealing With the Energy Crisis

Pakistan’s acute energy crisis has affected each segment of society. In summer season frequent power outages crippled the lives of people when the gap between demand and supply was constantly increasing and shortfall reached between 6000 to 8000 megawatts. In winter season, the situation has even become the worst due to shortage of gas.

 

Natural gas meets 49 percent of total energy requirements in Pakistan. Due to relatively lower price of natural gas, and indiscriminate promotion of use of compressed natural gas (CNG) for transport sector, the consumption of gas has substantially increased. Pakistan consumes all the indigenously produced gas, the Sui gas field in Balochistan is the biggest natural gas field in Pakistan, while the pace of developing new gas fields is slow.  The increasing demand for gas by domestic sector, transport sector and for power generation has created demand-supply gap that has eventually led to massive cuts in gas supply to industry, power sector, and CNG stations but the domestic users are the worst sufferers.

 

Energy crisis has been a major contributing factor for slowed economic growth rate by negatively impacting Pakistan’s already meager economy. Pakistan though, having potential to meet its energy needs in general and to enhance power generation capacity in particular has remained unable to utilize its indigenous resources to overcome the energy crisis. Apart from internal political differences among federating units for the development of indigenous resources particularly hydro power projects, there are many other hurdles, naming a few,  as lack of foreign investment and financial sponsors, precarious security situation and weak economy that have hampered progress in energy sector.

 

The energy crisis has not emerged overnight; the increased urbanization in a couple of decades was indicating a huge gap in demand and supply. Apart from technical and political reasons our decision making structure is equally responsible for energy crisis. One of the major hindrances in achieving energy prosperity has been the lack of coherent energy policy. Energy issues have been dealt with on temporary basis while adopting a project oriented approach rather than goal oriented approach. The best examples are Independent Power Procedures (IPPs) of 1990s and Rental Power Plants (RPPs) of previous government. The IPPs enhanced power generation capacity by more than 5,000 MW, but costly furnace oil burdened the people and created price hype, as far RPPs are concerned, due to lack of transparency these only resulted in wastage of public money and gave rise the controversies. Though, unable to utilize indigenous resources, it is imperative to explore viable regional resources to meet the haunting energy challenge.

 

Pakistan has been cooperating with Turkey and China in the energy field. Pakistan and China have decades old collaboration in the field of renewable energy especially in developing hydro power projects in Pakistan. They hold regular meetings of Pakistan-China Joint Energy Working Group to decide the future course. These initiatives are useful but given Pakistan’s dependence on natural gas and the shortage of indigenously produced gas, Pakistan has been negotiating with the states to import natural gas to meet the increasing demands. In this regard, TAPI and IP are two proposed pipeline projects.

The TAPI (Turkmenistan-Afghanistan-Pakistan-India) is gas pipeline project that government has considered seriously but given the  complexity of issues involved in the actualization of the project the future of TAPI does not seem promising. The precarious security situation in Afghanistan and uncertain post 2014 withdrawal scenario pose questions about the ability of Afghan security forces to guarantee the security of pipeline. Apart from security considerations, India-Pakistan rivalry may have negative impact on the pipeline project as it has been the case in Iran-Pakistan-India (IPI) pipeline project. These factors make TAPI less attractive option in the near future.

 

While much debated Iran-Pakistan gas pipeline project since its inception has been mired in controversies. Starting with the Indian refusal to join the project, the uncertainty regarding applicability of US sanctions on the pipeline project, Pakistan’s concerns over price of gas and political transitions in both states have stalled the project so far. The IP project if materialize, presents immense opportunities, in addition to meeting Pakistan’s energy needs it has the potential to transform the geopolitical landscape of South, West and Central Asia by developing the networks of regional connectivity.

 

Pakistan needs to develop indigenous resources on medium and long term basis but these gas pipeline projects can be adopted as short term solutions to the energy problems as these would considerably contribute to Pakistan’s energy mix and help sustaining the economic growth hampered by energy shortage.

The article was carried by Daily Times on January 17, 2013.  The views expressed belong to the author and do not reflect the policy of the institute.

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