NationalVOLUME 17 ISSUE # 48

Diversify sources to tackle energy crisis

Ministers and higher government officials’ statements about an impending gas crisis during the upcoming winter season have started alarm bells ringing for all and sundry.

Recently, Minister of State for Petroleum Musadik Malik warned that the country could face severe gas shortages during the winter season. Petroleum Ministry Secretary Ali Raza Bhutta, briefing the Public Accounts Committee (PAC), said the country’s natural gas reserves were declining sharply, while gas prices in the international market had shot up. Both the factors could drive Pakistan toward a gas crisis in the upcoming winter.

He made it clear that the local gas reserves were not enough to meet the country’s demand, and these were also declining by 10 per cent annually. Alongside, the Russian-Ukraine war has inflated gas prices by two to three per cent in the international market. Considering the market condition, Pakistan is in no position to buy gas for winter usage, he warned.

Last month’s superfloods have brought more misery to the nation, and it is feared the natural calamity might become an annual feature if no corrective measures are taken immediately. The energy sector’s reciprocal relationship with other economic activity, especially agriculture, makes resiliency particularly vital for Pakistan and other developing countries. Extreme heatwaves, wildfires, and now this superflood showcase that Pakistan is on the frontline of a deepening climate as well as energy crisis. Being the eighth most at-risk country for climate change, Pakistan’s lack of preparation and mismanagement can serve as a cautionary tale to inspire climate preparedness reform worldwide and inside Pakistan itself.

Experts believe Pakistan’s energy sector is particularly vulnerable to exogenous shocks and rising input costs due to its reliance on imported fossil fuels and infrastructural bottlenecks. Pakistan gets 27% of its energy from hydropower, but with the country reliant on a single primary river system, the Indus and its tributaries, the recent floods have endangered major power grids and exacerbated power shortages across the country.

In the Gilgit-Baltistan region, which possesses a massive hydropower potential and is the gateway for the China-Pakistan Economic Corridor (CPEC), 22 power stations have been damaged, leaving 90pc of the region without electricity. In the southern province of Sindh – the hardest-hit by the floods — power stations in the Khairpur district remain inundated, leading to increased power outages. Last week, authorities scrambled to successfully secure the Dadu power station, which supplies electricity to six other districts, as a forecast of heavy rain threatened a blackout over most of interior Sindh.

According to official data, hydropower is not the only energy source devastated. Numerous gas pipelines in Balochistan have been damaged, cutting off the supply to the UCH Power Station, which supplies 932-MW of electricity to the country. While repair works are underway, consumers continue to face 10-15 hours of blackouts daily across the country. The lack of the power supply has also pushed up energy costs for the people of Pakistan.

Energy experts say rising power and gas bills and blackouts are not just a product of the devastation caused by the recent floods. They are a consequence of Pakistan’s non-diversified energy strategy and a lack of infrastructural resiliency. The floods have shattered an already broken energy system. Pakistan faced a massive energy crisis even before the floods as its energy import costs skyrocketed due to soaring global commodity prices. Islamabad paid $4.9 billion for its LNG import bill alone for the year ending June 2022. Despite the worsening impact of imported energy on the country’s fiscal standing, Pakistan opted to secure more foreign LNG supplies while consciously eschewing domestic investments since in the short-term it is easier to fill the gaps in energy demand given the existence of the production infrastructure and the ease with which LNG-powered electricity can be added to the national grid. With Pakistan only sourcing 6pc of its power from renewables and 4pc from nuclear sources, this lack of diversification has proven to be disastrous.

However, it is a pity that the focus is still somewhere else, and not on diversifying power generation, to reduce production costs, and conserve crucial foreign currency reserves. The country has diverted its focus away from fuel oil not to cleaner gas or renewables, but towards a politically cheap and convenient, yet heavily polluting fuel: coal. It will add to climate degradation in the long-run, hence more superfloods in future and more energy crises.

On the other hand, the poorly executed Iran-Pakistan gas pipeline project has fallen victim to sanctions imposed on Iran and failed to extend any benefits to Pakistan to resolve its energy woes despite political endangerment and reputational risks. While recent developments including considerations between Pakistan and Iran to conduct energy trade by the way of barter to avoid triggering US sanctions signal that the project may resume again.

The only good news amidst the energy crisis is Prime Minister Shehbaz Sharif’s approval of a 10,000-MW solar power project, called the National Solar Energy Initiative. There are also plans to establish another nuclear reactor, which is a step in the right direction to cut the country’s reliance on imported energy. As a nuclear power, Pakistan should invest heavily in its own nuclear energy production, increase the capacity of its existing reactors, and establish new reactors. The solution to the country’s ever-increasing energy crisis lies only in diversifying the sources, and focusing on renewables.