And its implications
Management of the economy is probably the most excruciating and arduous undertaking that the modern day governments are burdened with, owing to a variety of reasons including resource constraints, economic trends in the global economy, international obligations and in certain cases the prevailing security environment that hinders the implementation of economic initiatives. Unfortunately, Pakistan has been the victim of the combination of all these factors in regards to surmounting the energy crisis that has had devastating impact on the economy and has also severely affected the lives of the masses.
The energy crisis inherited by the PML-N government is probably the most formidable challenge for the country and the government after the scourge of terrorism. The reality is, as admitted by Prime Minister Nawaz Sharif during his speech at Chiniot, Pakistan does not have the necessary resources to undertake the energy producing projects to tide over the current shortage as well as to cater for the burgeoning energy needs of the future. Trans-regional projects like TAPI and CASA-1000 are on hold for security reasons in Afghanistan. Pakistan is not in a position to complete IP Gas Pipeline for importing gas from Iran due to international sanctions against Iran. Similarly, the Iranian offer for 1,000 MW electricity for Gwadar and further 3,000 MW for the rest of the country remains as elusive as ever for the same reasons. Under the circumstances the government had no option but to look for foreign investments in the energy projects in Pakistan and also to explore all other possible avenues, both internal and external, to tackle the situation.
The government during the last twenty months has made successful efforts in attracting foreign investments in the energy sector, especially the power generation projects under the Pak-China Economic Corridor. Ground breaking ceremony of a nuclear power plant at Karachi with a production capacity of 2,100MW has been performed. Work on the Bhasha-Diamir Dam has been set rolling. Strenuous efforts are also in the offing to complete the Neelum-Jhelum Project. Some power projects based on renewable energy resources are also in the pipeline. But the dilemma is that they are all long term projects which would take 4-5 years for their completion, except for the last one which is likely to be completed by the end of the next year. Reportedly, in view of some unavoidable technical and allied reasons, the government had perforce to abandon the coal-based power plants at Gadani.
In view of the foregoing facts, the government had to find a plausible short term solution to the energy crisis, pending the coming on stream of the major power projects. The shortage of gas was affecting the industrial development, the CNG industry as well as the domestic consumers. CNG industry was particularly on the verge of extinction due to the decision of the previous government to phase out the CNG sector and use the gas for more pressing needs. An industry with an investment of Rs450 billion with nearly seven hundred thousand jobs was on the line. The government took a very prudent and pragmatic decision to import LNG for the CNG sector through negotiations with the All Pakistan Compressed Natural Gas Association (APCNGA) in last October. According to the agreement, the government would allocate the pipeline capacity and the SSGCL and SNGPL would deliver re-gasified LNG to the CNG stations in an open market based environment. The project is likely to be completed within 18 months. The first terminal for import of LNG at Port Qasim will be ready in March and the SSGC is in the process of floating a tender for the construction of the second LNG terminal.
The hallmark of this initiative is that the entire operation would be done and completed by the private sector and the government would only play the role of a facilitator by providing enabling environment and the required incentives. In view of the increase from 3.7 million to 4.5 million in the CNG operated vehicles within one year, the government has already allowed the import of CNG kits. The decision to allow import of LNG by the CNG industry and measures put in place to ensure effective implementation of the new initiative, reflect government’s concern for resolving the problems of the masses and its unflinching commitment to their cause. It has created a win-win situation for all the stakeholders. The use of LNG in the transport sector is likely to curtail the oil import bill by US$2.5 billion. It would also release 17 MMcmd of natural gas which would be diverted to power plants for production of 1,600 MW of electricity. According to official sources, the Bin Qasim LNG terminal would start supplying re-gasified LNG to the consumers by 31st March.
Recently, the government has taken another decision to import LNG for the power producing units and also to set up a new power project with 3,600 MW capacity based on LNG. Reportedly the Cabinet Committee on Energy, Chaired by the Prime Minister, gave the approval for starting negotiations with Malaysia, China, Algeria, Nigeria and Trinidad for the import of LNG on 12 February, 2015. Minister for Water and Power, Petroleum and Natural Resources briefed the committee in respect of the new LNG based power project. The decision of the government to shift the emphasis on imported LNG to cater to the needs of the household consumers, CNG industry and power generation is a very sagacious move which would go a long way in fulfilling the gap between the power producing capacity and power requirements of the country within a short span of time and contribute to the optimal running of the industrial machine of the country and meeting other economic needs.
These measures adequately indicate the seriousness and commitment with which the government is striving to tackle this problem both on the short and long term basis, notwithstanding the resource constraints and other debilitating factors. There is no quick-fix solution to this problem and the people as well as the critics of the government in regards to power shortage need to understand it. Hopefully, by the end of the tenure of the government, as repeatedly claimed by Prime Minister Nawaz Sharif, the country would be out of the energy crisis and well on its way to a sustained development. There is no quick-fix solution to this problem and the people as well as the critics of the government in regards to power shortage need to understand it.
