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Transportation: Reducing the petroleum consumption

  1. NAB explain its position
  2. Cotton: An important cash crop
  3. Transportation: Reducing the petroleum consumption

May 01 - 07, 2000

Dr. Salman Ghouri, Mozaffar Ali Khan & Amjad Saeed Yazdani *

In Pakistan, transport accounts for only 33 per cent of the final energy consumption. But this share is almost exclusively made up of oil. Air, sea and road transport account for half of oil consumption followed by power sector. Road transport, however, is the biggest sector, consuming more than 93 per cent of the oil consumption i.e., about 149,000 barrels per day (B/D) in 1999. The demand for oil in Pakistan is increasing at an annual rate of about 6 per cent due to: rapid growth in population, rural-urban migration, farm mechanization, increase in per capita income, substitution of other sources for oil, decline in the share of freight carried by Pakistan Railways and rapid increase in number of motor vehicles. There were about 4 million motor vehicles on the road during 1999, and this number is expected to exceed 4.5 million by 2005. Beyond that, demand for oil consumption in transport sector will also increase to 210,000 B/D.

On a global basis, demand for transport facilities is also growing rapidly. Presently, there are over 620 million motor vehicles on the world's roads. By early part of this century, there would be over 650 million vehicles, consuming roughly 40 million barrels per day — causing an acute congestion, parking difficulties, accidents, death and casualties and air pollution.

The importance of the hydrocarbon sector of Pakistan's economy continues to be highlighted by the growing demand for petroleum products and declining trend of domestic oil production. During 1999, in the total energy spectrum, oil and gas accounted for over 81 per cent (oil 42.8, gas 38.6 and LPG 0.4 per cent), hydel electricity 12.8, coal 5.1 and Nuclear energy 0.2 per cent. A substantial portion (about 84%) is imported in the form of crude and petroleum products for US$ 1467 million. That is, only 16 per cent of the country's oil requirement was met by indigenous oil, which after attaining its peak in 1990-91 has declined to 54756 (B/D) in 1999 with some upward and downward fluctuations (Figure-1).

During last three decades, there has been a significant shift in petroleum consumption. For example, the share of petroleum over the years has increased in power and industrial sectors, while it has declined in others. But the share of transport sector still dominates, consuming about half of the petroleum products. Therefore, Pakistan's energy problem is mainly associated with transport sector, which consumes bulk of High Speed Diesel (HSD) and gasoline (Motor Spirit, MS and High Octane Blending Component, HOBC). Both these products together account for about half of country's oil consumption in transport sector, and incidentally for the bulk of country's import of petroleum products. Off-course power sector is equally important that consumes 33.2 per cent of oil, but the present discussion would only recapitulate to petroleum consumption in the transport sector.

About 95% of oil consumed in transport sector is consists of HSD, MS and HOBC, while the share of other fuels is only marginal. During 1999, HSD accounted for over 78% of the fuel consumed in transport sector (6.508 million tonnes of oil equivalent, TOE), 85% of which was imported for US$ 569 million (5.177 million TOE).

MS and HOBC is the second largest fuel consumed in the transport sector and accounted for 15 per cent of the total fuel consumed in transport sector during 1999. The consumption of these products is increasing at an average annual rate of over 6 per cent. In 1983, fuel driven vehicles roughly consumed 12,000 B/D and by 1998 it has more than doubled to 25000 B/D. This increase was due to greater preference for personal vehicles (cars, motor cycles and scooters) in the absence of adequate/efficient public transport.

The HSD and HSD consuming vehicles is positively correlated and has risen sharply since the mid 1980s. In 1983, vehicles driven by HSD consumed about 39,000 B/D and by 1999 over 126000 B/D. That is, Pakistan's major energy problem is associated with ever increasing demand of HSD. The growth in the number of buses, a cheap mode of transportation shows a mild rising trend, which is not sufficient to meet the growing demand. The only way to counter this situation would be to increase the number of buses to meet the demand of the ever-increasing population. Although, there has been a significant increase in the number of buses, their share has declined from 5.58% in 1967 to 2.1% in 1999. In sharp contrast, the share of motor cycles, and fleet of trucks, tractors and delivery vans has increased, while that of cars, jeeps and station wagons has considerably declined, but with a rising trend.

Figure-2 traces the trend of freight carried by Pakistan Railways (PR). The trend is downward, as trucks, delivery vans and tractors capture most of the freight once transported by PR. Exact data on road freight is not available. Nevertheless a huge volume of freight moving across the country has been witnessed. To carry 1.6 times more freight, trucks consume about 9 times more diesels than the railways (for freight). This only confirms the well-known energy efficiency of railway haulage of high-bulk density goods, compared to truck transport. Despite this, the share of total freight transported by road (the more inefficient mode) has significantly increased.

The success of truck transportation could be explained in terms of the financial and resource costs of freight transportation. The resource costs (i.e., all the resources of the society utilized to move a commodity) of both truck and rail transport are proportional to distance. The transportation cost of trucks is lower than that of rail for short hauls. However, it rises sharply with distance and quickly exceeds rail cost, which becomes relatively flatter with the increase in distance. That is to say, there is a break-even distance, below which, cost of truck is economical and above which rail transport is more economical in terms of resource use (Figure-3). However, it has been experienced that trucks are still able to move freight over the break-even distance because they are not paying the true social price of HSD. That is, the price of HSD has been subsidized and pegged at a price slightly above the price of kerosene. For example, during 1999, the per liter price for HSD was Rs. 10.66 and for kerosene it was RS 10.50. The price of HSD cannot be increased without a proportionate increase in the price of kerosene, because otherwise the transporters would profitably adulterate HSD with cheap kerosene oil, creating a shortage of kerosene in the domestic sector where it is mainly used for cooking purposes. The other factors for this trend are also linked with inefficiency of the publicly owned Pakistan railways — shortage of railway wagons, delays, pilferage of goods, lack of door to door service and unreliability. Pakistan Railways needs to rationalize freight and transport management to establish their credibility and a proportionate share in the market.

With the given growth rate, the number of vehicles on road is expected to surpass 4.5 million by 2005 consuming over 210,000 B/D. This rapid upsurge in the trend could have been arrested if the new public transport scheme was confined to yellow buses alone. An increase in the number of yellow taxies in the past (although reduced the unemployment and mitigated the transport problem to a certain extent) could not completely solve the transport problem as taxies fare is beyond the affordability limit of a common man. However, with more efficient in-city public buses, train (especially in Karachi where rail infrastructure is in place) run as per schedule, with specific routes and properly maintained, would definitely encourage a greater use of public transport.

ECONOMIC AND SOCIAL IMPLICATIONS:

If the present population growth trend continues, Pakistan's population will be over 300 million in the year 2025 (from 140 million in 1998) (excluding massive influx of refugee). In other words, the country will be more crowded, more polluted fewer stables ecologically, and more vulnerable to disruption than the country we live in today. Serious stresses involving population, resources, traffic congestion and polluted environment lie in store for us. Total number of vehicles is expected to be more than 15 million by 2025, which, in turn, will increase the consumption of petroleum products manifold. Pollution from these motor vehicles will have a pronounced effect on peoples' health, life style, and the greenhouse effect and a deterioration of weather conditions.

One can easily visualize the implications of these on the busy throughways such as Murree Road (Rawalpindi), I.I. Chundrigar Road, M.A. Jinnah Road, Shahrah-e-Faisal, University Road (Karachi), Multan Road, Mall Road, Muzang Road (Lahore) in the year 2025. Other already congested parts of internal cities would worsen beyond imagination. The present situation of these major roads during peak hours is very irritating as traffic barely crawls. Congested traffic is both time-consuming and fuel consuming; it pollutes the environment by emitting CO and CO2. A necessary constituent of road transport is the role of CO2 and a proportionate damage to the greenhouse glory.

Additional number of motor vehicles on the existing road network also means a rapid deterioration of the physical infrastructure and a decline in the average commuting time and efficiency apart from the above problems. For example, the average speed during peak hours in Karachi city is not more than 15 km per hour, which is 22.5 per cent slower than the average speed of a horse-drawn cab in 1941! In downtown, it is even worse:

In the United Kingdom the first underground subway came in to operation in the early 1850s and in the United States it was in early 1860s. Did these countries need this kind of investment during that time? In fact, they planned for 100 years ahead. The vital question is: Should we conceive a similar capital intensive scheme now to provide a well established infrastructure, better communication network and pollution free environment to our next generation? Is the cost, which we are paying in terms of money and time, loss in traffic congestion and health hazards caused by CO and CO2 not more than the cost of subway, motor ways, by-passes, over-heads and better/efficient public transport? Could we afford that? Yes, the only thing needed is careful planning and a sincere commitment. We need to channel our resources towards these projects with dedication. The hardship we impose on ourselves today would give us a healthier tomorrow. At the same time, we could also look for better alternatives, equally efficient to solve our existing transport problems.

Had we had a better and efficient public transport system we could have saved 8 — 10 per cent of our monthly salaries incurred on fuel consumption on our personal cars. The banks could use these small savings for providing loans for industrial, agricultural and other productive uses to boost our economy and generate adequate employment opportunities. This would also mean that the country would be importing less of oil that in turn had a positive impact on country's balance of payment.

RECOMMENDATIONS:

Prompt and meaningful changes in Public Policy and an environment which would promote a meaningful Public/Private sector partnership will be needed to avoid or minimize these problems before they become unmanageable. Both the government and the people should set to themselves common goals: reduction of oil consumption, more and more use of public transport as in other countries and a pollution-free environment. As earlier discussed, the share of freight carried by Railways has been captured by road transport — resulting in significant increase in consumption of HSD and acute congestion and increase in the number of road accidents. It would be more appropriate that government should examine and take necessary steps to improve the efficiency of railways and devise incentive-oriented policies to encourage the use of railways for the transportation of goods. In addition, most of the crude oil from producing fields and refined products to the consumption centres has been transported through bowsers, which is an inefficient/ineffective mode of transportation. Therefore, more pipelines infrastructure to be expanded in order to minimize transportation through bowsers. This would ease road congestion, reduce the number of road accidents and bring about a sizable reduction in petroleum consumption. In addition, if the following suggestions, practiced/implemented, will certainly check the high growth rate of petroleum consumption that is deteriorating country's balance of payment.

Individual

  • Car pooling

  • Compulsory use of school buses

  • Better operation and maintenance of motor vehicles

  • Planned trips to commercial centres to avoid unnecessary second/third trips

 

Efficiency improvements

  • Scrapping the very old stock of motor vehicles such as cars older than 30 years. Government may introduce incentive-oriented policies like rebate/exemption in import duty for the purchase of new vehicles once people align themselves to government policies.

  • Crude/white product pipelines to be expanded to reduce transportation through inefficient/high cost road transportation.

  • Better traffic flow on existing roads by keep well-maintained highways, bypasses and overheads to avoid congestion / pollution.

  • Linking school timings with that of office timings, or five working days in a week (8.00 am to 5.00pm)

  • 10-15% reduction in HSD consumption can be achieved through training truck/bus drivers in fuel conserving, driving habits and timely maintenance

  • Allow schools to import yellow school buses at reduced duties.

  • Educate the people and provide awareness about the consequences of pollution on future generation.

  • Impose heavy fines on vehicles spreading pollution on road.

Shifting passengers to public transportation

  • Provide efficient public transport to shift passenger traffic from personal vehicles to public transportation.

  • Optimization of routing of buses depending upon the passenger flows from home to workplace and back

  • Designation of special lanes for fast moving traffic

  • Banning of non-bus non-emergency traffic, particularly truck on key bus routes between 7.00-9.00 AM and 3.00-5.00 PM (peak school/office hours).

Shifting freight traffic from road to rail

  • Necessary steps to improve the efficiency of Pakistan railways

  • Device incentive oriented policies to encourage the use of railway for the transportation of goods

  • Cancellation of long-haulage or inter-province truck permits except for special cases

  • If subsidy on HSD cannot be removed, then increase in road taxes on trucks and make use of these funds for improvement on the road network

  • Incentives for linking up trucks with railway freight destinations to facilitate freight movement

  • Reorganization/restructuring of Pakistan Railways to bring about efficiency.

Increase the use of CNG/LPG

  • In order to promote CNG on mass scale, the government should reduce the initial capital cost of CNG kit.

  • More CNG stations all over the country, including highways.

  • Public transport should also encouraged to use CNG

*The views expressed in this paper are those of the authors and not necessary those of the organization*