Apr 25 - May 1, 2011

Over the last couple of years natural shortage has been growing at a fast pace and spells of load shedding are growing. This precarious situation has been created due to 1) failure in increasing indigenous production of oil and gas, 2) no progress on Iran-Pakistan-India (IPI) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipelines and 3) inordinate delay in construction of LNG terminal and allied facilities. As a result the country is facing worst shortage of gas leading to closure of manufacturing facilities and suspension of CNG sale for days. This on the one hand is affecting economic activities and on the other hand pushing more and more people below the poverty line.

While one may put the blame of delay in execution of IPI project on India as well the United States the economic managers of Pakistan could be held solely responsible for the delay in execution of LNG project. Some of the experts went on to extent of saying that no one neither the bureaucracy nor the elected representatives are serious in resolving the energy crisis. The violations committed both in the rental power plants and the LNG project indicates presence of 'commission mafia' national objectives and priorities seem no where in sight, added to this has been the legal resource.

Experts also say that holding India and United States responsible for the delay may be easy but were Pakistani not aware of that. Ironically, Pakistanis failed in reading Indian tactics of delaying the project and in the mean time concluding successfully nuclear power general deal with the US. If any one says that India was opposing IPI project under the US pressure it is completely false. This becomes evident when one sees Indian involvement in the construction of Chabahar port in Iran and linking it with Central Asia via road and railways.

Some Pakistanis had suggested that IPI should be reduced to a link between Iran and Pakistan by excluding India completely. However, the policy planners are still bent upon including India in the project. Any one insisting on including India in this project should be termed a novice or completely devoid of capacity to think rationally. Iran-Pakistan pipeline is in the best interest of both the countries. The security threat, particularly to that part of line passing through Balochistan is also the part of the strategy on anti-Pakistan and anti-Iran elements. Enemies of Pakistan and Iran are involved in blowing up of gas pipelines and also the electricity towers.

One could only laugh on the simplicity of those who term TAPI more secure as compared to IPI, despite the fact that gas line has to pass through Afghanistan in the state of war for more than four decades. On top of this, probability of restoring peace in Afghanistan is almost negligible, as against the disruption in Balochistan is caused by external elements. The uprising in Balochistan is supported by those who want to fragment Afghanistan, Iran and Pakistan and create two more land-locked countries by creating independent Balochistan and Pukhtunistan.

Ideally, IPI is the best option for Pakistan for overcoming gas shortage in the country. It is the responsibility of the government of Pakistan to convince the US to stop opposing the project and the most convincing argument is, if India is allowed to construct port and allied infrastructure in Iran why there is a pressure on Pakistan to abandon the pipeline project and why is the US not ready to supply Pakistan nuclear technology it has provided to India?

The second best option is that Pakistan should construct the LNG storage and handling facility at the earliest. One finds no reason for construction of facility by the public sector enterprises only. After the public sector entities having created the worst mishap, the time has come to allow the private sector to construct the facility. For those who are still a victim of the fallacy that only the public sector entities could undertake such mega facilities, the time has come to get rid of 'self created notions'. Private sector of Pakistan is already involved in the bulk import of LPG and also the distribution. If private sector entities can handle bulk import of LPG, why can't they undertake project for bulk import and distribution on LNG?

Lately, the entire energy sector has been a victim of inter corporate energy crisis and mobilizing capital for LNG project may cause some problems. Similarly, multilateral donors also seem keen in extending credit to the private sector entities. At one stage, these institutions have supported the idea of private power producers and now the time has come for them to support formation of private sector enterprises for the construction of LNG termination along with related paraphernalia.

Since construction of onshore LNG storage may take more than three years, an alternative but workable option is to bring in floating storage tanks also having the requisite facilities for injecting the imported gas into the distribution network of gas marketing companies. The time has come for the private sector to take control of the proposed projects.

Mobilizing funds for the project also does not pose any problem. All the major consumers of gas i.e. fertilizer companies, textile mills, power plans and cement companies can acquire stake in the proposed company and their good track record will convince the multilateral financial institution to take equity stake as well as provide credit for the proposed company. There is a demand and consumers are willing to pay to have uninterrupted supply at affordable cost.