THE ENERGY SECTOR

The ups and downs

By AMANULLAH BASHAR
Jan 13 - 19, 2003

In a remarkable development, since 2001, almost half of the country's demand for petroleum products is now met through local production.

This is a sharp improvement from 2000 when local production of POL products was able to met only 34 per cent of the country's demand. The increased domestic production of POL products reflects the commissioning of the 4.5 million tonnes Pak-Arab Refinery in 2000.

As refining capacity of the country increased, imports of petroleum products declined 8.9 per cent to 9.2 million tonnes last year generating gross savings of $424 million. Low domestic demand and increased domestic production allowed exports to rise by 194.2 thousand tonnes to approximately 600 million tonnes. The export increase is more than total exports of petroleum products two years ago. These gains are expected to further consolidate with the commissioning of two more refineries i.e. Bosicar and Pak Iran Refinery in 2003 and 2005 respectively.

The petroleum sector has however witnessed significant changes during the last few years. Despite a marked increase in the availability of petroleum and petroleum products, except the power generating sector, the consumption of oil has actually declined in almost all major economic sectors. Whether the economic managers buy the idea or not major reasons for decline in consumption is exorbitant price of POL products leading to increase in cost of production.

POWER

The current installed power generating capacity of the country is estimated at 18 Giga Watt. The increase in the installed capacity of the country during the last two years was brought about by the addition of Chashma Nuclear Power Plant of 325 MW, Chashma Hydro power project of 184 MW and Liberty Power 235 MW.

The addition in nuclear and hydel capacity is encouraging, as this would bring some financial relief to WAPDA and KESC through a fall in the overall cost of electricity generation. The increase in installed capacity last year was accompanied by a 7.8 per cent rise in electricity generation compared to a 3.7 per cent increase in the previous year. As expected, the rise has come from a surge in electricity generation by all the three sources. With the arrival of Gazi Brotha Hydropower projects with an installed capacity of 1,450 MW comes into commercial production this year, hydel generation is expected to witness a substantial increase.

GAS

Despite a sluggish global economic environment and which would help in developing huge data base for achieving desired improvement in tax collection system of country. "We will hire services of industries specialists in cement, sugar and textile related sectors to get first hand information of major industry of the country", he added.

He said that the CBR wanted to utilise all gathered information upto maximum level and expertise of everyone would be applied in every tax to serve the country. He said that it was established fact that wherever in the world run exploration companies, total recoverable gas reserves have been estimated to reach 27 trillion cubic feet in the country.

Discoveries by Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) recently have raised the reserves from about 21 trillion cubic feet.

Pakistan's untapped gas reserves were over 200 trillion cubic feet. Of the recoverable reserves, the country is producing about 2 billion cubic feet of gas per day. This amount of gas consumption is however falling short for meeting the ever-increasing demand especially after conversion of power generation and transport sectors from oil to gas fired system. In order to meet the demand the gas marketing companies including SSGC and SNGPL have to added another billion cubic feet per day in their distribution system which has already been approved by the ministry of petroleum. The enhanced consumption of natural gas is aimed at reducing the huge oil import bill costing about $3 billion a year to the national economy.

The three gas fields Zamzama, Bhit and Sawan would cumulatively add considerable reserves to country's overall gas production and the operators of these fields are currently engaged in developing the fields for production. These newly developed gas field when brought in production line would increase the gas supply to about 3 billion cubic feet. However, the government is encouraging exploration and granting more concession areas to companies to ensure that the production does fall short of demand in the coming days when the gas consumption will at its peak after done away with the use of oil in various sectors of the economy.

The government has a target to enhance the production of natural gas to the level of 3.4 billion cubic feet a day.

The gas distribution companies are also raising capacity to deliver the additional gas to the consumers. Accordingly, SNGPL and SSGC both are investing up to Rs20 billion to improve the infrastructure to cater to the need of additional demand of gas in the country.

Hopefully, the additional gas will not only cut the oil import bill but it would also allow the power sector to switch over to gas run plants especially the Independent Power Plants (IPPs) which are producing costly thermal power in the country.