Gas Shortages: A New Reality
Pakistan's energy woes continue as citizens gear up for another cold winter.
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Photo Credit: AFP
"I am alarmed because there will be a problem this winter but an even bigger problem next winter," said Prime Minister Imran Khan at a seminar held in early September. In what is becoming the new norm, the country is gearing up for another winter where gas will be in short supply.
In fact, this is already having an impact, with Karachi facing power outages as gas supply to K-Electric falls short of its needs. Exporters, who were recently optimistic about their business after receiving some orders from India and Bangladesh - two countries struggling to control the outbreak of the COVID-19 pandemic - are now having to cut production:
Pakistan Hosiery Manufacturers and Exporters Association Chief Coordinator and Former Central Chairman Muhammad Jawed Bilwani said textile related units have been facing low gas pressure for the last 22 days as industries were producing 60 per cent less goods which would lead to decline in exports in September.
He claimed that Karachi-based exporters are not taking new export orders due to gas crisis.
Falling domestic production of natural gas has exacerbated the situation, with the SSGC warning that outages will be the norm in the coming months:
In a statement issued this week, the state-run gas distribution company said the shortfall was “imminent,” and urged authorities to make alternate arrangements to meet the demand. “Karachi and other parts of the province could possibly face a shortfall of 300 million metric cubic feet per day (mmcfd) in winter,” the gas utility said in a statement.
So what is the issue all about?
Political spokesmen across party lines are blaming each other, with the PTI-led government saying that Sindh’s failure to give right-of-way to gas pipeline projects causing the problem in Karachi.
Meanwhile, Sindh’s Chief Minister and PPP leader Murad Ali Shah has said that the PTI is blaming Sindh to hide “its own incompetence.”
Former Finance Minister Miftah Ismail thinks that importing LNG may solve the issue:
And while he is right about the fact that additional imports can ease the crisis — his thread is worth a full read — one must ask about how the country will pay for the import bill, given that it has not managed to grow its exports in the last few years.
In reality, energy independence is needed to sustainably deal with this chronic issue.
To better understand what the issue is, I spoke to Samiullah Tariq, Head of Research and Development at the Pakistan Kuwait Investment Company. You can watch the 20-minute discussion below.
According to Samiullah, the issue is structural and while importing additional LNG may solve the issue in the short-term, the long-term solution rests in painful reforms, starting with changing the price of natural gas paid by consumers.
Pakistani households have been addicted to cheap natural gas, which made sense when the country was meeting a significant portion of its demand from domestic gas production. With domestic production declining and the country increasingly relying on gas imports, it is time for consumers to pay close to market prices. Currently, a complex system of cross-subsidies means that industrial users pay a higher price, which in and of itself is a problem given that it erodes their global competitiveness.
Once again, we need structural reforms
Additionally, a lack of investment in the gas sector means that major new discoveries have not been made. Even if such investments were to be catalyzed tomorrow, it will be years before the new fields come online.
In addition to pricing reform, policy makers needs to shift away from this desire to give a gas connection to millions of additional households. Homes in Pakistan use natural gas for two primary reasons: stoves and water heaters. Using gas for both these uses is inefficient, particularly for heaters in winter months, which are placed outside homes. A more efficient way to meet this energy need is through electric heaters and stoves, and with Pakistan having excess power capacity, this shift is now possible.
But issues in the electric grid means that while Pakistan has excess power capacity, the grid cannot reliably transmit and distribute this power.
Which brings us to solar power connectivity.
Pakistan lags countries like India in terms of solar power adoption. By incentivizing households to put solar rooftops and shift to electric stoves and heaters, a significant portion of the growing gas demand can be curtailed. The excess gas can then be routed towards more efficient, production-linked uses, such as power plants and industrial units.
But pushing through these reforms needs political will and agreement, something that is increasingly looking impossible given the current polarized political environment.
So if you are a consumer with some excess savings, it might be time once again to take matters into your own hands.
A few years ago, countless citizens switched their vehicles to CNG as it became a cheaper source of fuel. Many more bought diesel, petrol, and gas generators when chronic power outages became the norm. Now, it seems like citizens will have to find ways to add solar panels to their roofs and purchase electric-powered stoves and heaters.
With power shortages paralyzing Karachi and a bleak winter outlook, it may be time for Pakistanis to dig deep and do what they have always done: “apni madad aap.”
The Pakistan Gas Stream, is the revolution
In Step 1 - Putin is preparing the stage to exit the EU Gas market and pushing the EU to expensive LNG and billions in LNG infra ! That will raise the cost of manufacturing and cost of living in EU and thus the inflation in EU.Hence,EU will NO LONGER be an export hub to PRC and Euro will depreciate SEVERAL EU INDUSTRIES WHICH USE GAS AS AN INPUT (FEEDSTOCK OR FOR POWER - BEYOND A %),WILL CEASE TO EXIT.
In Step 2 - The Gas not sold to EU,will be sold,via many streams - like the Pakistan Stream, to "LOW COST NATIONS", where lower GAS COSTS = REVOLUTION,like in Pakistan ! Pipeline Gas, will crash the cost of Power, and also ,the cost of Industrial manufacturing = lower imports and a quantum leap in exports = NO CAD and PKR appreciation. In addition, several NEW INDUSTRIES,WHICH USE GAS AS FEEDSTOCK,WILL COME UP.
In one stroke,Putin has crashed,Pakistan's cost of manufacture, and make EU manufacturing unviable
In Step 3 - Putin will use Pakistan to export to EU,,products which ARE UNVIABLE TO MAKE IN EU or TOO COSTLY (due to the RUSSIAN EXIT FROM THE EU GAS MARKET).This is Genius !So Putin, 1st destroys EU manufacturing,raises EU inflation and THEN GETS NATIONS LIKE PAKISTAN TO EXPORT TO THE EU - to offset the EU lack of competitiveness !
Let us call this VALUE ADDED GAS SERVICES and tapping into the Gas Value addition Value Chain
In Step 4 - Putin will get PRC to invest in Mega Billion USD SEZ in Pakistan - TO USE RUSSIAN GAS,CHINESE MONEY,CHINESE TECHNOLOGY,PAKISTAN MANPOWER AND PAKISTAN's GEOGRAPHICAL POSITION, TO SET UP INDUSTRIES,WHICH ARE GAS GUZZLERS ,FOR EXPORTS, TO THE WHOLE WORLD - ESPECIALLY,THE EU. Russia and PRC will be investors in these industries,in part,and will use the profit streams to invest in the Pakistan Coal and Minerals sector, for conversion to power,and metal smelters.
In Step 5 - .No nation has more skill in metal smelting than Russia, & no nation has more need for Metals - than PRC.That makes the Gas,Minerals & Metals, a perfect mix.The House of Saud, is already investing Billions in Pakistan Oil - & will invest even MORE with the Russian-China-Pakistan triad - to make a Quad,right next to India !
In Step 6 - The industrial revolution will begin in Afghanistan - with the Gas Pipeline & the minerals, will be extracted on a massive scale, for conversion,at the nearest logistics point,which is Pakistan (in the short term) - also because,Pakistan has a deep draft port for export !
In Step 7 - The Indians will try to scuttle the gas grid,with the Americans - in Afghanistan or Kaza or Uzbek or EVEN in Pakistan.That will place Pakistan-PRC-Russia-Afghanistan-Kaza-Uzbek ,into a security grid,with billions pumped into Pakistan ,for Missile tech,ADS, Navy & Airforce,by Russia &China.
In Step 8 - That leaves out ,ONLY FOOD ! Hence, PRC & Russia - who are the best water and dam experts in the world - will get water into Balochistan & other parts of Pakistan, by making dams & canals,to use the fertile lands of Pakistan to feed Russia,PRC & the Central Asian republics.Consistent water supply & low cost power,can cause an AGRI REVOLUTION ,w/o any peer in the world.No other nation or geography has that much potential.(and Baloch has Gwadar,,for exports)
From Peter the Great,to Putin the Divine !
Many opined about this TRIAD of PRC-Russia-Pakistan - but only 1 man,saw it,a long time ago,when it was considered, a crazed rhapsody.Lt Gen Hamid Gul ! Time for Pakistan to exit the Axis of the USA.dindooohindoo
A NWO has been born,with the Russian Octopus,which has the brain & body of PRC-Russia, tentacles (like gas pipelines) and each tentacle is REVOLUTIONISING NATIONS LIKE PAKISTAN ! It will also provide a no-war guarantee from the Indian weasels,as the India-US axis will not attack Russian and Chinese Assets inside Pakistan
Thiis is the Model for a Win-Win Partnership by Russia and PRC all over the world.
Jiye Jiye Pakistan !