With winter just two months away, while the common man heaves a sigh of relief from inflated electricity bills and unending load-shedding, just around the corner, lurks not so insidiously, the same hardship under the cover of gas unavailability. In fact, winters are months of double-whammy. With gas load-shedding affecting factor incomes throughout the year, the onslaught of winters exacerbates the feeling of ‘national’ loss when fuel is unavailable for the simplest of domestic needs.
The current debate blames the Musharraf government for encouraging extensive use of gas for power generation and transportation leaving about 25 per cent less for more vital industries like fertiliser, bringing down plant utilisation rates and in more basic terms, creating a shortage of urea. Moreover, taking into account escalation in respective prices reveals that gas charge from the Sui Field for feedstock purposes increased by 177 per cent between 2008 and 2010. Similarly, Mari gas prices were also brought at par and thus increased by about 13 per cent during the same period. Gas prices for power generation have also increased by about 44 per cent since 2006.
For the domestic CNG consumer, gas prices as of FY10 stood at about PKR 504/mcft having increased by more than 50 per cent over the last two years. It does not take a policy maker to realise that a heavily impending supply deficit exists on the back of rapidly depleting gas reserves. Currently, recoverable reserves stand at about 26 trillion cubic feet (tcf) down from an earlier and oft-quoted 31 trillion cubic feet. The depletion has occurred on account of more than 1tcf consumption annually. Thus, the essential choice is between consuming all of the pie at once or savoring it in small pieces, implying that if the current gas demand was satisfied fully, the gas reserve depletion rate would be at least 20 per cent higher.
As a contributor to GDP, the electricity and gas distribution component registered a negative growth of 21.1 per cent during FY11. In addition to depressing manufacturing growth indirectly, this overwhelming decline overshadowed the otherwise impressive 23 per cent contribution made to GDP by the manufacturing sector resulting in a negative net contribution overall.
Moreover, gas curtailment is also responsible for triggering the erosion of wealth at the local bourse. A primary example is the current lows hit by the share price of Engro Corp. Investor confidence first became shaky at the news of gas curtailment creating a run from which the scrip has still not been able to recover.
All eyes now look to the Iran-Pakistan gas pipleline, which is estimated to cost Pakistan about $1.3 billion. While current news projects successful domestic interest in raising more than $200 million in equity and $300 million in debt, the remaining amounts would have to be sourced through an external lender. Much tricky that would be keeping in view Iran’s strained political position internationally, in addition to the reinforced wave of the ongoing international financial crisis.
Moreover, another strong point of lamentation arises given that around Rs192 billion have been spent on setting up more than 3200 CNG stations in addition to CNG kit installation in 2.5 million cars as of Mar-11. All of this investment will amount to scrap once the CNG–petrol parity is established amounting to more than $2.2 billion in comparative terms. This move has been proposed several times although gas for transportation uses up a small percentage in comparison to the corresponding industrial appetite.
Pakistan has historically, relied on foreign assistance to get the economy on the go. At this time, when the latter requires more nutrition to grow, the key ingredients or inputs are suddenly missing or simply unavailable. While, the losses are huge and money injections on new ventures wait in line, the country waits for a miracle, a new leaf.
Who will save us now?
The writer is an economic researcher
and freelance journalist
saudia arabia !
The country run by the Americans can't save us
We don't need any body to save us now its our own turn to fight against the problems been faced by us
it was a sarcastic comment
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