NationalVOLUME 16 ISSUE # 06

Gas crisis: The last straw?

The Sui Northern Gas Pipelines Limited (SNGPL) shocked people when it announced that gas would be provided for only cooking during the winter in the Punjab. Prime Minister Imran Khan and his ministers have also warned of a serious gas crisis in the coming months. The warnings mean the ground reality will be even starker and gas will not be available for cooking and people would have to arrange for firewood or look for other options, if the experience after recent wheat, flour and sugar crises is any guide.

Experts say Pakistan’s gas reserves are depleting by almost 10pc annually and they will stop production in less than 20 years. Past governments failed to address the issue and only took temporary measures to bridge the gap between supply and demand. Though the crisis is not the sole responsibility of the present government, yet it will hit it badly and raise questions about its ability to tackle crisis. It will not only hurt the common people but also malign the image of the government, which is still reeling from the fallout of wheat, flour and gas shortages.

In fact, textile exporters in Sindh are already facing gas shortages. As the gas crisis is feared to worsen in the coming months, the textile sector, which is the biggest employer and foreign exchange earner of the country, will be negatively impacted. It may leave thousands of people jobless and deprive the country of precious foreign exchange earnings. It is feared that Sindh might face higher gas shortages than the Punjab in the coming winter and the federal government blamed the provincial government for the possible closure of the industry and suffering of the people, particularly in Karachi. The gas shortage in the Sui Southern Gas Company Limited (SSGCL) network, which serves Sindh and Balochistan, is projected to touch 400 million cubic feet per day (mmcfd). Estimates say the gap between supply and demand is expected to be around 350mmcfd in the Sui Northern Gas Pipelines Limited (SNGPL) network which serves the Punjab and Khyber Pakhtunkhwa.

In a briefing to the National Assembly, Minister for Petroleum Division Omar Ayub Khan said the country was going to face a serious natural gas shortage in upcoming winter months due to a widening gap between demand and supply. Gas consumption increases manifold by the domestic sector on account of use of room and water heaters.

Addressing a seminar on the gas supply in Pakistan, Prime Minister Imran Khan warned that Pakistan’s indigenous gas reserves were depleting fast and the country was importing it to plug the shortfall. The Premier said that the country was heading towards a serious gas crisis. “I am alarmed because there will be a problem this winter but an even bigger problem the next winter,” he feared.

Pakistan is importing gas to plug the widening gap, but it has to pay a high price for it, as it is far costlier than the indigenous product and the government has to provide it at subsidized rates to domestic and commercial consumers. It puts huge pressure on its foreign exchange reserves, which remain at the bare minimum level. There is a big difference in the price of domestic and imported gas. With imported gas costing Rs17 a unit, its sale at Rs14 per unit creates a gap of Rs3 a unit, which leads to a serious crisis. Dependence on imports also increases the circular debt of the energy sector. According to the government, circular debt in the gas sector has already jumped to Rs250 billion.

Pakistan has relied on indigenous gas for decades, but its reserves have depleted now after its reckless use. Only 27pc households have access to piped gas while the remaining use LPG cylinders, which are four times more expensive than piped gas. Pakistan has reached a point where it really needs to think about it seriously, especially when the winter is around the corner and there is usually a shortage of the gas supply. All provinces and stakeholders need to debate on the issue keeping a close eye on the development of the country. It is also not possible that a province progresses and the country’s economy fails. The subsidy on gas should also benefit poor people. The country needs a comprehensive roadmap to come out of the gas crisis.

It is a fact no long-term planning was made in the past to cope with the energy crisis. Successive governments failed to exploit the hydro potential of the country to produce cheap electricity, which could be a better option. However, all blunders and mismanagement of past governments lie at the doorstep of Prime Minister Imran Khan’s government. He also failed to take practical steps to clear the mess in over two years and only warned people of a serious gas crisis.

Gas production in Pakistan is falling fast, which means the crisis will worsen every year. Peoples’ experience says when Prime Minister Imran Khan warns of an impending crisis, it is more serious than their imagination. The government has promised to ensure the gas supply to domestic consumers three times a day for cooking. It means gas will hardly be available for lunch or dinner. The Prime Minister should have informed the nation about steps his government has taken to avert the crisis instead of a stark warning. However, he still has time to rectify the situation. He should start efforts to build a national consensus by bringing all provinces on board.