The energy sector is
likely to take a new turn in Pakistan with the go ahead signal on the
two gas pipeline projects from Iran and Turkmenistan to India via
The two cross border gas
pipelines may be the most significant outcome of the normalcy of
business relations between India and Pakistan.
Minister Khurshid Mehmood Kasuri, while accepting India's suggestion to
resume business before resolving the issue of Kashmir, has put two gas
pipeline projects high on the agenda of the talks between the two
countries. The Minister has proposed that gas pipelines to India from
Turkmenistan and Iran be laid though Pakistan and said Islamabad was
ready to give international guarantees to ensure that gas flow would not
suffer even in the event of war or hostilities.
The natural gas is
gradually assuming a leading role on the economic development of
Pakistan. In order to assign greater role to the natural gas in energy
consumption, authorities are concentrating to develop a strong
transmission and distribution network from the gas-fields to the users.
Musharraf in a recent interview telecast by PTV has admitted that the
high cost of electricity in Pakistan was the disturbing factor
especially for the common man. He however said that the government was
taking appropriate steps to bring down the prices of electricity by
shifting the power generation from oil based to gas fired system. The
power purchase agreements with the Independent Power Producers was
another area responsible for high cost of electricity in Pakistan. Steps
are however underway to overcome this problem.
In order to get enhance
the use of natural gas, we need a strong infrastructure network for
which the international donor agencies have also shown their keen
interest to invest in the energy sector.
The World Bank in its
report on the development of energy sector in Pakistan has emphasized
enhancing the full-scale utilization of natural gas in the country. The
bank has demanded unlocking the full utilization of the natural gas
because Pakistan required more gas to overcome its energy needs and to
minimize furnace oil import bill by converting the local industries from
furnace oil to gas.
The Work Bank, according
to reports, has asked for the withdrawal of subsidy on the provision of
gas to the consumers. Subsidy given to domestic consumers was being
withdrawn over a period of three years. However, a fixed 40 per cent
subsidy to the low income group with monthly consumption below 100 cubic
meters would continue. It may be mentioned that 40 per cent of the 3.5
million consumers would not be affected by the withdrawal of the subsidy
In this respect, the
Asian Development Bank (ADB) has extended $200 million technical
assistance for the Public Private Infrastructure Financing Facility in
the Oil and Gas sector to the Ministry of Petroleum and Natural
The main object of this
multimillion-dollar technical assistance is to help developing
infrastructure through private sector involvement. This will promote
economic growth as well as help reducing poverty in Pakistan.
Traditionally, energy sector has been the domain for public sector
investment, exhausting the scarce public resource against other
competing demands. The absence of private sector greatly hampered
infrastructure development that leading to slower economic growth.
This is one of the unique
programs in the oil and gas history of Pakistan in which ADB would
provide a facility of $200 million with a grant of $400,000.
The remaining amount of
the $200 million package would be provided in the form of technical
assistance and soft term loan.
The Ministry of Petroleum
has directed all subordinate departments including OGDC, SSGC, SNGPL,
Mineral Development Corporation and private companies to chalk out
meaningful project proposals within the scope of this facility.
There are strong chances
of getting contracts of this project by foreign-based companies in view
of their strong financial and technical capacity to deliver the goods on
such a large-scale project.
The OGDC has also worked
out a multi-pronged strategy to achieve the projected oil and gas
production of 24,000 barrels per day against its current capacity of
21,000 barrels and 9,000 million cubic feet against its current capacity
OGDC is also working on
war footing to complete its four major projects namely Bobi field,
Qadirpur expansion project in Sindh, Dakhni expansion project in Punjab
and Chanda field in NWFP.
On the power generation
side, Ghazi Brother Hydropower Project (GBHP), with an installed
capacity of 1450Megawatt, will be a significant addition to the hydel
capacity which will also help in containing the ever growing cost of
thermal power in Pakistan. Ghazi Brotha project is set to go into power
generation from next month. The project will be providing a strong back
up to the power generating capacity of the country.