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Review of gas demand, supply and existing crisis

International experts state that a well organized and integrated infrastructure for transmission & distribution of natural gas is one of the biggest in developing world. Our domestic experts also mention that the natural gas is a main contributing fuel in Pakistan’s energy mix. The optimistic growth of many sectors like commercial, residential, power and fertilizer and depletion of gas reserves resulted in constrained natural gas availability. The government experts calculated that the natural gas is indigenous supplies share approximately 38 percent in total primary energy supply mix of Pakistan and it has an extensive gas network of over 12,829 km transmission, 132,065 km distribution and 34,631 services gas pipelines to cater the requirement of more than 8.9 million consumers in the whole country.

The government experts also recorded that during July-Feb FY2018, average natural gas consumption was about 3,837 Million Cubic Feet per day (MMCFD) counting 632 MMCFD volume of RLNG, as against to 3,205 MMCFD previous year. It is also said that the power sector continues to remain the largest consumer of gas, followed by the local sector. During July-Feb FY 2018, the two gas utility firms have laid 328 Km gas transmission network, 8,861 Km distribution and 1,216 Km services lines and connected 231 villages/towns to the gas network.

Statistics also showed that during the period under discussion, the gas utility firms have spent Rs 1,351 million on transmission projects, Rs 10,202 million on distribution projects and Rs 11,198 million on other projects bringing total investment to about Rs 22,751 million. Additional gas connections of 428,282 were provided in the whole country extra counting 426,721 domestic, 1,519 commercial and 42 industrial. Industry experts also registered that fluctuation in natural gas supplies directly affected GDP growth rate during the previous almost 2 decades.

Pakistan has heavily been dependent on natural gas for meeting its energy needs as and the statistics suggest that low use of gas has had a direct impact on the national GDP of the country. Particularly, the pessimistic impact considerably rose between 2006-07 and 2015-16. Statistics also showed 1.0 percent of GDP growth in Pakistan requires 1.25 percent escalation in energy supply, which primarily happens to be natural gas. The demand for natural gas would additional rise in the upcoming years and hence gap would be widened.

Presently Sindh produced 70 percent of its total production in Pakistan. Statistics also revealed that the natural gas consumption rose at a compound annual growth rate of 8.1 percent from 1997-2006. It peaked during 2005-06 when the country attained an impressive growth rate of 7.6 percent. The average annual economic growth rate, during the period, remained at 4.27 percent. It is also registered that since then, the gas availability started to see a fall and so does the national growth rate. Unavailability of natural gas led to its consumption declining to 0.29 percent for the 2006 to 2015 period. Present studies mention that the country would face a rising deficit in gas supply because of ever-increasing demand for gas. Gas shortfall is anticipated to stand almost 4.0 billion cubic feet per day (bcfd) during 2019-20 and the gap will stand 8.5 bcfd by 2029-30. Gas supply interruption has cut economic growth to an average 3.65 percent in a decade spanning over 2006 to 2015.

 

Furthermore statistics also explained that the first liquefied natural gas (LNG) policy was promulgated after the then government foresaw shortfall of natural gas back during 2005 as the policy was revised during 2011. Since then, various attempts were made for import of LNG but to no avail. Consequently, uninterrupted supply of re-gasified liquefied natural gas (RLNG) to the power, compressed, fertilizer, commercial and industrial sectors has allowed them to operate at a comparatively cheap, efficient and clean fuel.

Experts also recorded that in Pakistan the greater gas availability in early 2015 on the back of opening import window of LNG, which enlarged to over 1.2 billion cubic feet, rose supply to industrial and other sectors of Pakistan. It is feared that the gap between gas demand and supply would shortly start widening unless its supplies are not raised at par with the growing demand through exploration of available solutions.

It is also said that following initiation of gas imports, the share of RLNG in the gas supply started to rise and is hovering almost one-sixth of total supplies currently. In peak winter months, however, it hardly meets one fourth of demand. This gap would tend to rise unless supplies are not raised on continuous basis. It is also important to mention here that Pakistan has become the world leading Compressed Natural Gas (CNG) user country. Presently, greater than 3,416 CNG stations have CNG marketing licenses in Pakistan. However, the Government of Pakistan also mentioned in a statement that the mushroom growth of CNG stations in the country vis-à-vis depletion of natural gas reserves, there has been a ban on organizing of latest CNG stations since 2008. However, for sustainable growth of this sector, the present government has approved provision of RLNG to this sector with fiscal incentives of GIDC at the rate of zero and sales tax at the rate of 5 percent.

Conclusion

Presently CNG crisis is disrupting daily life and public transport system in Karachi. It is said that the official supplier of gas in Sindh and Balochistan, stopped the supply to CNG stations captive power plants of all general industries amid the acute shortage of gas and low pressure in the system particularly in winter. The closure of CNG stations had ultimately affecting the public transport in Karachi which had mostly disappeared from the roads. All efforts were being made to ease the situation and it is aimed to provide gas to the households on the priority basis. Provincial and the federal governments have been urged by the stakeholders to look into the matter and ensure gas resumption.

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