The PML-N government is very actively perusing LNG import and
also terming it the right solution to overcome Pakistan’s looming energy
crisis. However, some of the quarters attribute this to be nothing more than
‘rental power scam’. They insist that it is ‘selecting a lesser evil’ and
question the prudence of policy planners. They even go to the extent of saying
that the power energy policies of ruling junta have always been dictated by
those having vested interest. If rental power scam was a display of PPP’s
corruption the same may be said about distribution of half a trillion rupees
among the favorite IPPs by PML-N soon coming into power.
On the
request of the Ministry of Petroleum and Natural Resources, the Economic
Coordination Committee (ECC) has exempted the import of LNG from Gas
Infrastructure Development Cess (GIDC). The decision looks like a joke because
the purpose behind imposition of GIDC was to mobilize funds for the
construction of Iran-Pakistan gas pipeline and LNG terminal. Therefore,
collection of GIDC in imported LNG was irrational and to be blunt
unconstitutional. Ideally, imposition of GIDC is unconstitutional because it is
the sole responsibility of the government to mobilize funds for infrastructure
development fund and it should refrain from penalizing the customers. The ECC,
however, decided to levy five per cent GST on LNG import in any case, instead
of prevailing general sales tax rate of 16 per cent.
Over the years experts have been saying that Pakistan’ energy
crisis can be overcome by following a prioritized agenda that should include
immediate actions like; 1) curbing theft of electricity and gas and 2)
improving recovery of electricity and gas distribution companies. Let this
point be kept in mind that the PML-N distributed half a trillion rupees to
overcome circular debt issue. However, the government completely failed in
taking the above stated two steps. The result is that the size of circular has
bulged to around the same quantum in slightly more than one year.
The recommended medium term measure is changing the energy
mix by minimizing dependence on imported fossil oil by switching over thermal
power plants to coal, initially to imported one and then to indigenous. They
also suggest construction of smaller ‘run of the river’ type hydel power
plants, close to the places of power consumption
They also demand granting status of IPPs to sugar mills,
which are capable of supplying 3000MW to the national grid to begin with and
the output can be doubled by operating sugar mills at 100% capacity
utilization. At present the mills are produced around 5 million tons sugar
against an installed capacity of 9 million tons.
The added advantage will be double the production of molasses
that is the basic raw material for the production of ethanol, being used to
produce bio-fuel E-10 (motor gasoline containing 10% ethanol). This percentage
can be enhanced to 35% by taking advantage of Brazilian experience. The move
will: 1) improve capacity utilization of sugar mills and help in producing
exportable sugar, 2) enhance production of molasses and ethanol, 3) contain
motor gasoline import and above all save natural gas (CNG) currently being used
in vehicles.
In the medium term work on coal fired and nuclear power
plants should be completed on war footings but the core objective should remain
increasing hydel power generation. The country is capable of producing 40,000MW
hydel power and the added advantage of construction of mega dams are 1)
generation of electricity around Rs2.50 per unit as against cost of Rs15 per
unit produces at furnace oil based thermal power plants. The exact cost can be
determined by examining cost of generation of HUBCO and KAPCO, Pakistan two
largest IPPs.
While the fate of first LNG project is in doldrums the GoP has taken
decision to construct another LNG terminal at Gwadar. Early October the ECC
approved ‘fast track’ construction of 710km Gwadar to Nawabshah gas pipeline
and LNG terminal at Gwadar port as an alternate plan to facilitate
Iran-Pakistan pipeline and transport liquefied natural gas (LNG). The Gwadar to
Nawabshah pipeline, with 42-inch diameter shall be laid along with two
compressor stations. The terminal will have the capacity to handle up to 500
mmcfd of gas. Interstate Gas Systems (Pvt) Limited (ISGS) will be authorized to
execute the implementation of the project. The committee also directed the
Ministry of Petroleum and Natural Resources to finalize the funding plan
preferably on government-to-government basis or build, operate and transfer or
build, own, operate basis.
It is an incorrect perception that the country suffers from
shortage of gas. To be precise if use of gas in power generation is stopped,
thefts are contained the shortfall can be reduced substantially. If cement
plants can switch over to burning coal why power plants can’t be run on coal?
One has the reasons to suspect that ‘oil lobby’ is deadly against promoting use
of coal in power generation. This point gets credence if one looks at the
failure of the GoP to exploit Thar coal potential.
The time has come to put the things in right perspective and
take the right steps to overcome the energy crisis. Keeping in view the high
cost of LNG using it as a prime source of energy is highly imprudent. At the
best it could be used as a make shift arrangement during winter and during the
days supply from gas fields remain suspected due to annual turnaround. This
consumers should not be forced to pay for high cost imported case as the
country has ample supply if use prudently. Containing the leakages and theft of
Sui twins would can add nearly 1,000 mmbtu or more than what the GoP intends to
import as LNG.
