NationalVOLUME 17 ISSUE # 23

The worsening energy crisis

Recently, Prime Minister Shehbaz Sharif expressed his concern that Pakistan was facing serious shortages of electricity and gas. He regretted that the last government could not assess the situation and failed to take timely steps to improve the situation. His analysis is based on facts. But it is also a fact that it is not all that easy to overcome Pakistan’s energy crisis after rates of gas and fuel have skyrocketed in the world.

Pakistan is facing an acute shortage of power after its failure to run power plants to full capacity. It is feared that the situation will only worsen as Pakistan’s limited financial resources restrict its ability to buy fuel from overseas markets. The Ukraine-Russia war is adding to its woes. “Pakistan’s power plants are shut due to lack of petrol and fuel supply,” Finance Minister Miftah Ismail said. “A large number of plants are shut due to technical faults. Altogether, this makes for the loss of 7,000MW energy in the country,” he added.

On the other hand, many cities and towns are facing shortages of gas even in the holy month of Ramazan. The new government and its ministers have also warned of a serious gas crisis in the country. The warnings mean the ground reality will be even starker and gas would not be available for cooking and people would have to arrange for firewood or look for other options.

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 issues. It will not only hurt the common people but also malign the image of the government.

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. 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 Punjab and Khyber Pakhtunkhwa.

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. Until last year, imported gas cost Rs17 a unit and it was sold at Rs14 per unit, which created a gap of Rs3 a unit, which led to a serious crisis. Prices of gas have skyrocketed in the world now and the government will have to face even heavier losses this year. 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 Rs532 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 many times more expensive than piped gas. Pakistan has reached a point where it really needs to think about it seriously. 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 that 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 the past governments lie at the doorstep of the new government.

Gas production in Pakistan is falling fast, which means the crisis will worsen every year. Peoples’ experience says when the government warns of an impending crisis, it is more serious than their imagination. The government has promised to ensure the gas supply to domestic consumers for cooking. However, the situation will continue to worsen. The government should start efforts to build a national consensus by bringing all provinces on board.