WIDENING SUPPLY-DEMAND GAP

PAKISTAN IS LIKELY TO FACE GAS SHORTFALL OF AROUND 2.7 BCFD BY 2014.

KANWAL SALEEM
(feedback@pgeconomist.com)
Jan 10 - 16, 20
11

In view of depleting domestic gas sources and surge in its demands, the energy gap is estimated at 26 mmscmd (million metric standard cubic metres per day) by 2011, 77 mmscmd by 2015, and 293 mmscmd by 2025.

As per estimates, power sector of Pakistan consumes the largest portion of gas at 35.5 per cent. As the demand for gas grows, the supply-demand of gas in Pakistan is expected to be 26 mmscmd in 2011-12, 77 mmscmd in 2015, and 293 mmscmd in 2025.

The existing demand for natural gas is 179.17 mmscmd. Demand is expected to double by 321.77 mmscmd in 2011-12 and 920 mmscmd by 2013-32. Power would remain key sector consuming around 44-45 per cent and fertiliser sector would account for 27 per cent of demand.

The supply available was 106 mmscmd in 2006-07 (domestic 83.8 mmscmd, LNG 22.3 mmscmd) and conservation estimated to be 220.22 mmscmd in 2011-12 (domestic 164.23 mmscmd), and LNG 56 mmscmd. In 2011-12, the estimated demand supply gap is 101.55 mmscmd.

Pakistan's total gas production stands at 4 billion cubic feet per day and the estimated gas deficit will hover in the range of 568-917 million cubic feet gas per day (mmcfd). Pakistan is likely to face a gas shortfall of around 2.7 billion cubic feet per day by 2014 due to around seven per cent per annum rise in the demand for the commodity.

Gas shortage in the country is hitting hard the textile exports across the value-chain. The country's textile sector is already tumbling down due to multiple factors including massive increase in input costs, inclusive of energy and cost of borrowing and a host of other unfavourable conditions.

Estimates show that textile exports have witnessed a whopping 40 per cent decline recently due to adverse factors troubling over the last two and a half years.

On the other hand, the government has finalised the revised gas load-shedding plan for the whole country under which the industrial sector will observe 2-3 gas holidays per week, depending on weather conditions, and CNG stations will be closed for two days a week.

Textile industry has rejected this schedule altogether and termed it as a last straw on the camel's back.

According to Chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), the garment industry received a big blow last year due to abnormal cotton and cotton yarn prices against already committed low-priced deals with foreign customers. This year the garment industry is again facing music due to gas shortage despite having high-priced deals from the western customers.

Experts believe that the gas shortage will increase by 1.7 billion cubic feet per day during the current year and would touch around 2.7 billion cubic feet per day by 2014. If projects, such as Uch-II, Qadirpur gas compression project, Sinjhoro, and Tando Allah Yar, start production during the next two years, it is expected that the gas shortage will come down to 2.2 billion cubic feet per day by 2014.

The government needs to take concrete measures to overcome gas shortfall in the future, they added. Sector-wise data showed that 32 per cent of the country's gas is consumed by the power sector, followed by 25 per cent by industries, 17 per cent by domestic consumers, and the remaining by fertilizer, cement and transport sectors.

The country faces acute energy crisis, resulting in rise of gas demand in power sector, which under present circumstances, will persist for the next few years. The actual demand for gas by the power sector will remain higher by 65 per cent, (more than 600 mmcfd) during the current year, as compared to last year. The overall demand is expected to rise by 4.1 billion cubic feet per day this year to 5.7 billion cubic feet per day by 2014. In 2011, the gas demand is projected to increase by 14 per cent and 12 per cent, respectively, owing to higher load on the dual-fired plants for power generation, the experts said.

Officials at Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) had already warned earlier that gas outages could be longer in duration this winter. "Domestic consumers in Punjab and Khyber Pakhtunkhwa, who normally require 465 mmcfd, consume approximately 900 mmcfd in winter," they said.

Reserves in the country's large gas fields including Sui, Qadirpur, Zamzama, Sawan, Bhit and Badin are continuously depleting. No major reserve has been discovered in the country during the last couple of years, they added.

With decline in mercury, domestic gas production has actually increased, but it is not enough to meet the rising demand. "Production has gone a little above 4 BCF (billion cubic feet), but demand has shot up by a much higher margin," they opined.

Since 2005, the government has been implementing a gas load management plan every winter. It cuts supply to different economic sectors in alternate days. Industry suffers the most when that happens. Exports orders are difficult to achieve in the backdrop of gas shortage, industrialists said. According to them, the government was sacrificing economic growth without considering the fact that the manufacturing sector absorbed the semi-skilled workforce. "We have sacked over 50,000 workers in recent months because production has to be cut," they said, adding: "The whole point of doing business is that our factories work 365 days a year. How can we be expected to shut them off voluntarily?"

In Faisalabad and Lahore, there had been severe shortage of gas and electricity, prompting industrialists and workers to stage protests. Punjab government had complained to the federal government over discrimination in gas supply to Punjab.

Experts believe that the government's energy policy remained vague in the last five years, with no high official able to set correct priorities. "The only solution is to rationalise the price of gas. You cannot expect to keep bills at a few hundred rupees a month for domestic consumers and expect them to conserve," they said.