PAKISTAN has vast natural resources of natural gas and recent discoveries are enough to meet the country’s growing needs for the next 25-30 years.
That was the consensus among major foreign oil and gas experts who met at the Pakistan Oil, Gas and Energy conference in Karachi convened by the Pegasus consultancy recently. The foreign experts also said the country was repositioned to take advantage of the growing demand for gas by using LNG.
They advised that because of this abundant natural resource over commitments to buy foreign gas in excess should be avoided. They cautioned that if the current unhelpful regulations continued these may result in the drying up of energy production.
They said, the LNG had a great role to play, but the current regulations and the pricing policy should be made more helpful to the industry. They also called for a liberal and realistic policy towards LNG to promote its optimum production.
It was said at the conference that after the deregulation of the LNG sector in the year 2000, an investment of $150 million was made in that area and with further encouragement from the government $200 million more will be invested. Experts were hopeful that despite the pricing and other problems, the LNG sector was about to take off.
Meanwhile, the government does not want to leave organised energy development to chance. It has come up with a Energy Security Plan for a 25-year period-2005-2030 at an investment cost of $150 billion. Its end will synchronise with the materialisation of Vision Pakistan-2030 which will get the country out of all major economic problems and set it on a high growth trajectory with absolute poverty abolished altogether.
But with political stability missing from the country, no one can foresee which government will complete that process and make vision Pakistan-2030 become real. We have not been lacking in long-term or prospective plans. The first perspective plan 1965-85 was for 20 years and right in the middle came a 15 year old perspective plan. Planning is one thing; making it a real success is a different story.
Out of $150 billion to be invested in the comprehensive energy development, $50 billion will be in the public sector and $100 billion will be in the private sector. On an average the investment will be $6 billion a year with $4 billion in the private sector and $2 billion in the public sector. The average investment will be the double of what is being made now. The money has to be found and productively invested.
The objective will be to ensure reliable, quality and environment-friendly energy as needed by the growing economy. And that will include hydro power from the five large new dams approved recently— oil, gas, coal, nuclear energy and renewable energy in many forms including wind and solar power.
Maximum use of the indigenous resources is to be made and the import of oil cut to the minimum. The world oil price which has already touched $78 a barrel, may peak to $100 a barrel in view of the Middle Eastern crisis. Hence the government has to hasten to accelerate its efforts to develop the energy sector fast. That also demands the government should have a liberal policy towards the private sector including the foreign investors and offer them enough incentives to attract them to make such large investments. The government has also to price the energy in all its forms in a realistic manner.
That is imperative as the energy demand is expected to rise during the planned period seven times-from 55 million oil equivalent to 360 million tones oil equivalent. And the need for electricity would rise eight fold-from 19540 million megawatt in 2005-to 162,590 megawatt in 2030. Along with that very efficient use of energy is to be promoted, with waste and over-use cut to the minimum. This has been the policy all along, but has seldom been practiced. Waste and theft of power have been excessive.
The number of oil wells drilled is to rise from 100 a year to 330 a year-almost one will be drilled everyday. There is to be a major move towards renewable energy including the use of ethanol mixed with petrol in cars.
There will be a striking shift towards a large use of coal which will rise from six per cent of the total energy used now to 19 per cent by 2030. Initially there will be some import of coal as well to mix with the local coal. Along with that, during the interregnum, Pakistan will try to get gas from Iran, Turkmenistan and Qatar. The first gas pipeline is to become operational in the year 2010.
At the moment, there is a gap in the price demanded by Iran and the price offered by Pakistan and India which is 2 to 1. Iran wants to raise the gas price to international levels. In view of the increasing gas resources which are becoming visible, foreign experts have cautioned the government against over commitment to buy gas from foreign countries.
Pakistan has also been negotiating the purchase of 1000 mw of electricity from Turkmenistan through Afghanistan. The negotiation started a long time ago- in the time of Nawaz Sharif as prime minister, but has made little headway because of the disturbed conditions in Afghanistan. India too is said to be interested in obtaining power through that grid.
Pakistan is now negotiating the purchase of 100 mw of power from Iran for use at the Gwadar Port. The deal has been struck at 6.25 cents per unit by the Wapda, but Nepra which has the exclusive authority to fix electricity rates in Pakistan, is objecting to that for not being consulted prior to fixing the rate. The Iranian side had wanted 6.9 cents per unit and Pakistan had initially offered 5.5 cents. Both were finally settled for 6.25 cents.
Iran is now offering electricity for the adjoining Pakistani districts at five cents per unit. But to provide 100 megawatts of power to Gwader, Iran has to build a transmission line of 70 km in its territories and Wapda will build a transmission line of a hundred kilometers in Pakistan. But conditions in Balochistan have to stabilise before work on the transmission line starts.
Establishment of petrochemical plants and refineries by the private sector is a part of the energy security plan. Clearly, while the government has to invest one third of the funds earmarked by the plan, it has to work very close with the private sector and be responsive to its genuine needs.
