It would be an understatement to say that the country has been suffering due to the energy crisis. The country’s growth has been badly affected and GDP has been recording losses to the tunes of billions because of lack of uninterrupted power supply to run industries, commercial units and homes.
Implementation of gas
allocation policy
The country could have been in a much better position vis-à-vis the energy crisis had the gas allocation policy been implemented in letter and spirit. This is one area which needs to be looked into and the policy-makers must seriously sit together to identify flaws that could be removed so that all the power sector stakeholders are satisfied. The Natural Gas Allocation and Management Policy was finalised in 2005 by the Ministry of Petroleum and Natural Resources to develop a strategy to manage the fast depleting natural resources of Pakistan in the best possible manner thereby getting maximum benefit for the country’s needs. Most of the time, in Pakistan, the policies are designed with all the good intentions but a lack of will to implement the same leads to major crises. The same appears to be true in the case of the Natural Gas Allocation and Management Policy.
Exploiting natural gas reserves
There was a time in the 70s, 80s and even the 90s, when the country’s natural gas reserves seemed adequate to fulfill the country’s increasing energy needs. However, the crisis emerged with the increase in the demand of natural gas and depletion of some of the major natural gas fields in the country. In this background, the policy was developed by the Ministry keeping in view the dominant role the natural gas plays in the energy landscape of the country.
Besides other aspects, the policy includes the following clauses which are very clear with respect to allocation of gas to private captive power plants:
Clause 3.1.6 which deals with the supply of gas to all consumers says:
“Gas supply to all consumers in Captive Power Sector will be made after first meeting the requirement of domestic, fertiliser, commercial, industrial, and power (both WAPDA/KESC and IPPs) sectors on the following basis:
n Those dual fired power plants with a capacity of up to 50 MW, which employ combined cycle or cogeneration technology, shall be encouraged for allocation of gas. In order to ensure the optimal gas use for power generation, industrial units collectively setting up merchant power plants for self-consumption only will also be included in this category.
n Gas supply for self-power generation would be on “as and when available basis” at different locations.
n The pipeline extension, if required, would be at the cost of the sponsor of the industrial unit.”
Clause 3.1.7 is also very unambiguous and says:
“Supply of gas to Service Industry for captive power generation will be subject to the following:
n The sponsor makes an investment of over Rs500 million
n The gas load does not exceed 1 MMCFD.”
As mentioned above, these clauses are very clear-cut and stringent leaving very little room for deviation. However, one is justified in asking whether these conditions were met while allocating gas to service industry for captive power generation.
Were the conditions of the power policy met?
It is anybody’s guess whether over Rs500 million investments has been made by the captive power producers and whether the gas load has exceeded 1 MMCFD. In fact according to various estimates well over a whopping 200 MMCFD of gas has been allocated for captive power generation. This raises a serious doubt about the sincerity of those who are responsible for the execution of the policy as needs of the power sector, especially in Karachi, are being completely ignored to benefit a few. According to SSGC’s own published numbers, during the last one year, supply to power sector has seen a significant drop of 7 per cent – down from 29 per cent to 22 per cent. It is obvious that irregularities have been committed and there seems to be a massive misuse of executive power leaving the masses poorly served. It seems that millions of power consumers have been left to suffer the consequences of a powerful few who are out to violate the policy for the benefit of a handful of influential and resourceful persons. As has been the case, most of the time when seemingly well-intentioned decisions are violated, public interest is compromised and those responsible for these blatant violations go scott free.
Impartial audit of gas
allocation cases
Under the present circumstances, there is an urgent need for an independent and impartial audit of all gas allocation cases for captive power plants and those found responsible for these grave violations should be held accountable and punished. Ordinary people of Pakistan deserve to get justice as they have already suffered enough either due to anti-public policies or misuse of otherwise well meaning policies. The current power crisis, sharply rising tariff, growing burden of tariff differential subsidy and notorious circular debt issue can be attributed to fundamentally flawed policies that have resulted in exponential increase in the cost of electricity generation. On a macro level it is obvious that our electricity generation source-mix is completely messed up and it would take several years, perhaps over a decade, before we could correct that. However, in the short-term it could partially fix the problem, if the power sector is supplied the required natural gas so that reliance on the most expensive source of power generation – furnace oil – could be minimised. This will not only reduce the cost of power generation but will also provide relief to the general consumers as their electricity bills will be much more affordable and the government would not be required to resort to subsidies to provide relief to the masses.