Pakistan’s economic growth has been adversely effected by acute energy shortage, in the recent past.
From indigenous gas the energy mix is tilting away towards expensive imported oil with circular debt and challenging security environment deterring exploration activities as well as effecting other areas of energy chains.
As per recently issued Pakistan’s Energy Yearbook 2011, gas contribution to energy mix has declined to 48% in FY11 (versus 50% in FY06) while, oil contribution has sharply increased to 32% from 28% in FY06.
Surprisingly, overall energy supplies grew by 2.2% during FY11 while growth in demand remained relatively higher. Thus, widening energy demand-supply gap is posing a major challenge to Pakistan economic health, which is estimated to have curtailed GDP growth by 2% in last few years
During FY11, country’s primary energy supplies increased by 2.2% to stand at 64.5mn toe compared to 63.1mn toe in the pervious year, with major thrust coming from oil and hydro-power that rose by 4% and 13%, respectively. On
the other hand, gas supply remained almost flat compared to last year, despite growing demand in the country.
However, gas remained the major sources of energy supply, but its contribution has declined to 47% in FY11 as compared to 50% in FY05 and FY06. Furthermore, the pendulum is shifting towards oil and that even imported. Of the total oil consumption, country’s reliance on the imported oil increased to 86% as compared to 82% and 81% in FY09 and FY089, respectively. The shift towards expensive imported oil has increased country’s vulnerability to uncontrollable commodity shock as witnessed in FY08.
Its worth noticing, reliance on imported energy primarily arises from increased demand of petroleum products, particularly furnace oil (FO) which is primarily used for power generation. After adjusting transmission, system losses and non-energy use, final energy consumption of the country during FY11 stood almost flat at 38.8mn toe. This means that despite improvement in primary supplies, higher system losses restricted net supplies to almost flat.
Higher gas supplies to domestic sector in FY11: Owing to rising gas shortage, government opted to give top priority to the domestic which has no alternatives. In FY11 reliance remained on the domestic sector as despite gas supplies almost flat government supplied 6% more gas to domestic sector in FY11.
On the other hand, power sector which consumes almost 27% of total country’s gas, supply to this sector remained lower by 8% which also restricted overall electricity generation. Moreover, general industries which contribute 23% of total country’s gas faced reduced gas supply as well.
Interestingly, against general perception, gas supply to CNG sector increased by 14% in FY11. Last but not the least gas supply to fertilizer sector increased by 4%. However, despite higher supplies, gad demand from this sector remained much higher due to commissioning of new fertilizer plants.
