Winter season in Pakistan is knocking the door. In fact it has already started in some parts of northern areas. This year again we are expecting another gas crisis. Energy shortfall and disputes over its allocation have become regulars feature during winter season; as there is 40% increase in gas demand.
Around 40 percent of Pakistan’s energy needs are being met by natural gas. The power sector consumes 43 percent of the total natural gas available in the country whereas the residential domestic customers as well as the sector and fertilizer industry are consuming 21 percent each.
Sindh is the major supplier of natural gas, followed by Balochistan. However both provinces are going to witness an acute shortage this winter. With an addition of 700,000 consumers last year, Pakistan’s gas shortfall is estimated to jump by 157 percent to 3.7 billion cubic feet per day (bcfd) in fiscal year 2019-20 — almost equal to total gas supplies at present.
The estimates have been made by the Oil and Gas Regulatory Authority (OGRA) that put the gas shortfall increasing almost continuously every year to 6.6bcfd by FY2028.
The OGRA’s Industry Report 2017-18, indicated that the natural gas demand-supply gap during FY2017-18 was 1,447mmcfd and that this gap was expected to rise to 3,720mmcfd by FY2019-20. The regulator put the total gas demand at about 6.9bcfd in fiscal year 2019-20 compared to total supplies of about 3.2bcfd. This demand would increase to 7.7bcfd by 2024 but domestic supplies would fall substantially to 2.3bcfd, leaving a shortfall at 5.5bcfd. The shortfall would practically be about 3.6bcfd in FY2024 as the gap would be partially met by about 1.9bcfd of imported LNG.
The domestic gas production would continue to decline from about 3.3bcfd at present to less than1.6bcfd by 2028 while the gas demand would keep going up to reach 8.3bcfd by that year. OGRA estimated that despite the induction of all the import options, including LNG, Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan (IP) pipelines, the total supplies would decline to 3.7bcfd by 2028, creating a net shortfall of about 4.6bcfd, more than total supplies at present.
The gap was rising because of higher consumption in almost all the major sectors particularly power, domestic, fertilizer, captive power and industry as the supplies were not keeping pace with higher demand. Both the gas utility companies added around 0.7 million domestic, commercial and industrial consumers, in their respective systems, during fiscal year 2017-18. Consumer addition is increasing the gap between demand and supplies, day by day. Especially in winter, the gas demand further increased and as a result the government is being forced to curtail supplies to various sectors. Despite this, the natural gas is a major contributing fuel in the country’s energy mix. Its share in the primary energy mix is around 48 percent.
Another reason for this significant rise in demand and consumption of gas by residential and domestic consumers owing to price differential other competing fuels, i.e. liquefied petroleum gas (LPG), fire wood and coal.
The power sector was the main consumer of natural gas during FY 2017-18, consuming 37 percent, followed by domestic sector 20 percent, fertiliser 17 percent, captive power 10 percent , industrial sector 9 percent, transport 5 percent, and commercial sector having 2 percent share.
Punjab had the highest 50 percent consumption, followed by Sindh 39 percent, Khyber Pakhtunkhwa 9 percent and Balochistan 2 percent. Natural gas supplies during the year stood at 4.357bcfd, of which Sindh supplied 50 percent, whereas Khyber Pakhtunkhwa, Balochistan and Punjab supplied 12, 11 and 4 percent respectively. The remaining 23 percent of gas was imported in the form LNG.
The cut in gas supply is shifted to domestic consumers and other smaller industries that run on natural gas rather power and fertilizer industries. Historically, the demand of gas is increasing annually due to growing consumer base. Moreover many industries have switched to gas in last ten years. Similarly a fairly large number of automobiles have started using gas; which is a cheaper substitute for petrol or diesel. The policymakers sitting at helm of state affairs miserably failed to measure and forecast its impact on the long-term balance between supply and demand. Resultantly it hindered holistic and long-term planning.
Gas is cheaper option but we were not prepared for backfire. The policy makers were required to more proactive and comprehend the situation. This should accompanied by a data-driven forecast of the shortfall in supply. It would rather facilitate the policymakers to articulate a timely and long-term action plan to address the shortage before it happened.
Due to short term planning part, we have to have expensive imports in the short term. And even the continuity of this short-term approach has been effected by change of government or even changes in bureaucratic setup. Pakistan is in dire need of continuity in planning and implementation at all levels and economy should be top of the list. Beside continuity, flexibility to adopt changes is equally important to accommodate the unforeseen.
Transparency and accountability are the other two main aspects. The monopoly and hence their influence on policies and decision should be curtailed. The general consumer is required to demand data-driven accountability that not only clarifies the extent of the shortfall and its impact but also enables an open and honest debate so that coherent and comprehensive long-term policies be formulated. Keeping in view, the importance, priority should be given to natural gas crisis. It should be started by quantifying the indirect impact of the shortfall along with its direct impact on various sectors of the economy, including shortage of natural gas. It will indeed improve the overall energy mix by an effective, timely and long-term action plan.