Pakistan: Shortage of gas causing US$2 billion losses to economy

ip routeFor years experts have been warning the Government of Pakistan (GoP) about depleting natural gas reserves but successive rulers paid little attention. On top of all rising insurgency in areas rich in energy reserves, discouraged oil and gas exploration companies from working there. The result is excessive dependence on imported crude oil and POL products, now comprising more than one third of Pakistan’s total import bill. To contain current account deficit policy planners opted for over utilization of gas.

Some efforts were made to import gas from various sources but most of the projects could not go beyond drawing boards, the biggest and most obvious failure is completion of Iran-Pakistan gas pipeline project. While the policy planners may give all sorts of reasons for not making this project a reality, the blame should also go to various sections of the society who have been opposing this project. Experts even go to the extent of saying that fear of imposition of economic sanctions is only a hoax call, being made louder by the oil lobby.

Talking about this project has become all the more necessary because Iran initially offered to provide US$250 million for completing portion of pipeline to be constructed by Pakistan. Ironically at that time Mian Nawaz Sharif opposed construction of pipeline, presumably under some external pressure. After coming into power the PML-N government asked Iran to finance the project but the request was declined blatantly, which should not be surprising for any one.

Just the other day Shahid Khaqan Abbasi, minister for Petroleum and Natural Resources of Pakistan disclosed that the country was incurring an annual loss of $2 billion because of delay in import of liquefied natural gas (LNG). “No one is ready to take a decision on LNG import projects due to courts and media,” he said.

Speaking at a seminar held by All Pakistan CNG Association Abbasi said the government had planned to import two billion cubic feet of gas per day (bcfd) over the next three years to tackle energy shortages. One completely fails to understand how the shortfall will be met during this interim period.

His statement, “We are focusing on LNG imports, Iran-Pakistan (IP) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects to overcome the energy crisis” looks completely out of place because of funding issues. However, he surprised many by declaring that Iranian gas was cheaper than LNG.

Commenting on a report prepared by an institute terming the IP gas pipeline a cause of economic crisis for Pakistan, he said “loyalty of such people who filed the report is questionable.” However in the same breath he said, “Gas import from Turkmenistan through TAPI pipeline would be cheaper worth one billion dollar as compared to the Iranian gas but Pakistan is committed to the IP gas pipeline project.”

Critics fail to understand if the present government keeps on expressing its inability to mobilize funds for completing Pakistani portion of pipeline; it clearly shows non-commitment to the project. The logic is totally irrational because soon coming into power PML-N government paid Rs500 billion (equivalent to $5 billion to clear outstanding circular debt pertaining to energy sector.

Many experts say that mobilizing funds for IP is not an issue provided the United States stops opposing the project. All those who still prefer to call United States a friend say Iran-Pakistan pipeline is the litmus test of Pak-US friendship. If the US continues to oppose the pipeline its status must be changed to foe from friend.

The logic is simple because United States has imposed any economic sanctions on India buying millions of barrels of oil from Iran and also constructing Chabahar port in Iran and road and railway network to connect it to Central Asian countries passing through Afghanistan. This is the biggest evidence of dichotomy of US policies towards Pakistan and India. In other words the global super power is helping India in creating its hegemony in the region aimed at undermining importance of Pakistan.



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