WHY IGNORING INDIGENOUS RESOURCES?
Jan 10 - 16, 2011
The squeezed supply of gas due to the seasonal factors, particularly in the province of Punjab, has assumed political dimensions. The infighting of political parties has resulted in the framing of such charges against one another as "conspiracy against Punjab", "deliberately created supply crisis", "preferential treatment to Sindh and Balochistan provinces" and what not.
Apart from the validity of charges, the fact is that gas supply remained suspended for 10 consecutive days in Punjab when SNGPL encountered a 400 mmcfd supply gap. Most severely hit by the crisis are the industry and captive power plants in the province. Suspended/reduced gas supply has resulted in the closure of industry, mostly small and medium size, and the inevitable loss of jobs. The situation has triggered numerous, violent protests by the industrial workers in the major cities of Punjab.
All Pakistan textile mills association has quantified the textile industry's export losses at $800 million. Although our gas reserves are quite meager, the recent crisis seems to have surfaced due to the inept supply management.
The insistent inflationary pressure and the ongoing energy crisis have crippled our industry. Large-scale manufacturing has recorded a negative growth of 1.47 per cent during the first quarter of FY-11. The rising oil and food-items prices have increased our import bill from $13.08 billion to $15.37 billion during the first five months of FY-11. Although, percentage wise, a similar increase has been recorded in exports during the period under reference, the prevailing economic conditions suggest that a wider gap between imports and exports is bound to occur during the coming months. The tight monetary stance is yet another factor that has sent the cost of doing business so high as to discourage any worthwhile investment activities.
Coming back to the energy crisis, the only silver lining would appear to be the outcome of UCG (underground coal gasification) activities particularly the projects overseen by Dr. Samar Mubarakmand. One wishes to see his estimates of Thar coal value proving right.
According to the Pakistan Economic Survey 2009-10, Pakistan has recoverable gas reserves of 28.33 trillion cubic feet as of January 01, 2010. Presently 28 private and public sector companies are involved in oil and gas exploration and production activities. During the recent years, our cumulative per day production of natural gas has averaged around 4,000 million cubic feet. Simple arithmetic suggests that the reserves, at this rate, are going to last for another 20 years, at the most. With the fast growing demand for gas, especially after the de-dieselization of country's transport system and shift in electricity generation from furnace oil to gas, these reserves can at best be expected to suffice for 15 years or even less.
CIA World Factbook places our gas reserves at 840.2 billion cubic meter. Through conversion of this estimate to cubic feet (one cubic meter equaling 35.315 cubic feet), our reserves would appear to stand at 29.67 trillion cubic feet. This will give us a further breathing space of one year. The redeeming aspect of CIA World Factbook estimates is that our reserves are following an uptrend. But equally disturbing is the fact that our consumption level is also progressively growing. And, this is understandable in the face of mass conversion of transport system from diesel/petrol to gas during the recent years. Our failure to develop an economical and viable mass transport system has forced the people to acquire personal means of transport, even at the cost of cuts in food and clothing expenses. However, mass transit systems result in economies of scale while use of individual transport means at large induces wasteful energy consumption.
GAS CONSUMPTION AND SUPPLY PATTERN
. CONSUMPTION (mmcft) SUPPLY Year House-holds Commer-cial Cement Fertilizer Power Industry CNG Total Total (mmcft) 2001-02 144186 22130 7963 177589 314851 151416 7369 824604 923758 2002-03 153508 22776 3445 180611 335636 164968 11320 872264 992589 2003-04 155174 24192 7711 185350 469738 193395 15858 1051418 1202750 2004-05 172103 27191 13383 190409 507398 226116 24443 1161043 1344953 2005-06 171109 29269 15335 198175 491766 278846 38885 1223385 1400026 2006-07 185533 31375 14686 193682 433672 306600 56446 1221994 1413581 2007-08 204035 33905 12736 200063 429892 322563 72018 1275212 1454194 2008-09 214113 35536 7305 201100 404140 319003 88236 1269433 1460679 2009-10* 184525 28600 1650 162525 264825 246125 71225 959475 1109360 e * Jul-March e Estimated
Gas supply levels over the years have been in excess of demand for consumption. The recent gas crisis is therefore inexplicable. One possible explanation could be the ongoing uptrend in global oil prices and the resultant energy generation shift from expensive furnace oil to comparatively cheap gas. The major competing segments in the consumption matrix are power, industry, household, fertilizer, and the newly emerged CNG-user segment.
In the wake of limited gas supply, setting of distributional priorities becomes an arduous task. The situation, besides raising inter-provincial mistrust and political hue and cry, is pitting user segments against each other. SNGPL, during the ongoing crisis, cut supplies to industry and captive power plants to avoid a possible backlash from household consumers in Punjab who are already feeling the pinch of low gas pressures. The APTMA president is reported to have made the following statement: "The country's exports need to be supported rather than discouraged. The drop in exports will mean job losses. You can import urea. You can run your cars on petrol. But you can not import jobs."
There is something basically wrong with our decades-old policy mechanism. We keep entangling ourselves in external issues that could well be avoided in favor of internal capacity-building measures. We unnecessarily indulged in the war-efforts of Afghanistan and in consequence imported terrorism which is now eating into our economic and human resource base. And now, instead of developing our own energy resources - hydro and coal - we are looking somewhere else to solve our energy security problem. Why depend on the gas import program that is going to take years to materialize, if it really materializes? Why not to use these years in developing our coal resources to release pressure from oil and gas consumption? Why not conceive new hydropower projects and complete the ongoing ones in earnest? Why not accelerate the development of gas sector by putting in extra investment that it needs so badly?