UNPLANNED USE OF GAS CREATES PROBLEMS
Jan 10 - 16, 2011
Over the years, the energy producing sector has failed to meet the ever increasing demand of energy in Pakistan. Traditional methods of energy production have revealed a sad situation and are invoking disaster. Energy crisis mainly refers to the shortage of electricity or oil and gas. This shortage of energy has a significant impact on economy and economics of a nation - and the influence is definitely on the higher side when it comes to a nation such as ours. When there is shortage of energy, the pricing tends to be on the higher side, making it difficult for the producers of various goods and services, especially for export purposes, to maintain competitive pricing at the global arena - hence proving the significance of this factor for a nation's prosperity.
BOOM WITHOUT PLANNING
The economic think-tank of a nation is fundamentally responsible to foresee future needs of a nation i.e. the direction in which it is heading. When a nation comes across any period in an economic cycle, for example a boom, it would imply a rise in energy requirements. Subsequently, there would be plans to ensure that this requirement is met with futuristic plans, rather than carrying the backlog of energy shortages and ending up in a disaster. An economist would, in current day scenario, always recommend a rise in energy requirements for a nation that is growing or targeting growth. A very close example would be the government planning in the state of Dubai - the think tank knew about the traffic crisis, but they did not act for the present scenario rather their planning was for the traffic prospects of the next 10 years and plans came up accordingly, resulting in the development of metro-tube service. Such planning is the key of jumping from one boom to the other, and this is just an example of excellent infrastructure that leads to invitations for foreign direct investments in country. Energy is a basic need for an industry to function and prosper. It is worth mentioning that energy resources are not the only factor that has kept our nation on the back foot and keeping the foreign investments away from us. However, this is one of the critical factors for our failure.
The demand for gas, as an energy source, has increased 'expectedly' to greater heights, and despite the production levels increasing it is disproportionate to supply, and subsequently increasing the demand-supply gap. This gap is bound to increase further due to the winter, and increasing demand for local goods and services. This imbalance of demand and supply has led to loss of orders for export oriented organizations as their cost of production is going up, and not just that, but even at the higher costs, they fail to produce the goods and services, particularly due to the announced and unannounced load shedding of gas, and higher petroleum prices.
Pakistan's production capacity is highly dependent on gas as a source to suffice the energy needs. The gas pipeline network stretches to over 56,000 km, the pipeline density being over 1,000 km/mmscmd (million metric standard cubic meter per day), and a distribution network of over 30,000 km creates a network of distribution that serves over 3,000 CNG stations - the statistics make Pakistan a bigger consumer of natural gas than India - the latter relies more heavily on coal as an energy producing medium.
According to the Business Monitor International (BMI) Reports, gas accounts for close-to half of Pakistan's Primary Energy Demand (PED), oil has a share of close to 30 per cent, while hydro electric energy and coal account for 13 per cent and 8 per cent respectively. As of 2008, Pakistan had the highest number of vehicles running on CNG, 2 million and the highest number of CNG stations in 2009, approximately 3,000. With indications of low gas pressure, closure of CNG pumps, and gas load shedding for all consumers, gas shortfall crisis began showing their symptoms a couple of years back. However, with little or no action about the same, the crisis began to taking the grip. This has led to a troublesome situation as consumers
(both at business and home user level) were already having a tough time. The industrial areas and residential units of Punjab have been severely hit by this issue, and their protests have been widely registered and reported across the media. Previously, the All Pakistan Textile Mills Association (APTMA) also claimed to have incurred losses of about Rs1 billion due to lack of smooth gas supply to the industry. Other industries such as the steel pipe re-rolling mills have also suffered huge losses to the extent that a couple of them went bankrupt. Additionally, some had to give their labor longer weekends or shift working hours to ensure the smooth supply of gas.
PAK IRAN GAS PIPELINE PROJECT - A MINOR FUTURISTIC STEP
The Pak-Iran gas pipeline project is a step towards reducing the demand and supply gap. While Iran has completed the major work at its end, the pipeline is expected to carry gas from Iran to Pakistan in the year 2013. The documentation work has been done and at its current state it is a hope that this step reduces the imbalance of demand and supply. However, the forecast does not favor the expectation. The demand-supply gap is expected to rise further by the year 2013.
The failure of the governments in resolving the growing energy crisis in Pakistan is quite shameful. Works on Pak-Iran gas pipeline project need to be accelerated to ensure that the imbalance is reduced and the industries are saved from major losses. Other than this, there needs to be effective management to reduce the energy shortage across the country in the various walks of life. This activity would ensure that there is minimal impact on the consumers and the businesses assisting the economy recover from the current slump.