Pakistan’s Energy Front

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It is been decades Pakistan’s energy crisis is increasing with each passing day. Every government claims its efforts on energy front but nothing concrete has been done. Even in 1950 a student of NED university student Malik Aftab Ahmed Khan came with an idea and his article was published in Military College of Engineering “Persian Pipeline” he was awarded Sitara-e-Jurat. The project was conceptualized in 1989 and later in 2012 the annual conference of the International Association of Energy Economics backed the proposal. The Iran – Pakistan governments signed preliminary agreement in 1995. In 2014 the then Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi informed the National Assembly that project is off the table citing the International Sanctions as the reason.


The previous government after putting Iran Pakistan gas pipeline off table went for LNG import the LNG is costing more than $ 10.80 against $ 4.93 per British Thermal Unit cost of Iran Pakistan gas pipeline, if compared with other sources of energy like furnace oil $ 17.40, high speed diesel $ 24.30.  This simple comparison shows how many billion dollars in last 3 to 5 years we have expensed for putting the Iran Pakistan gas pipeline off the table.


The port Qasim terminal is pumping 600 to 630 mmcfd gas into the distribution network this shortage had made the government unable to provide gas to power plants, CNG stations, fertilizer companies. The government is also paying idle charges to power plants operating at most 50% of their capacity which contributes to higher tariff to power consumers. Due to power generation on furnace oil the power consumers will be charged extra Rs. 0.43 for debt servicing. To compensate shortage of gas, Pakistan imported furnace oil up to 400,000 tons to 650,000 tons.


Due to International pressures this project is still idle, however the Iran’s half of the project is complete. The Pakistan’s half of the project still needs to be initiated and completed which is expected to complete in 22 to 30 months time.


The present government should straight away take up to complete this project as soon as possible. It is going to be uphill task for the government as USA has yet again imposed sanctions on Iran and expected to go for more sanction next month November 2018.


The Kingdom of Saudi Arabia has signed MOU with Pakistan and agreed on various other investments. On the other hand Kingdom of Saudi Arabia is not having smooth relations with Iran that puts extra pressure on government of Pakistan to move ahead with Iran Pakistan gas pipeline. The Kingdom of Saudi Arabia according to sources reported in print media in 2012 offered alternate package to Pakistan, if they abandon its cooperation with Iran in addition to oil the package could include a cash loan and oil facility. In the recent visit by high powered delegation of Kingdom of Saudi Arabia signed MoU for Oil Refinery in Gwadar, Pakistan State Oil will partner with Aramco, the Saudi Oil giant.


The foreign office has however denied that Iran and Pakistan gas pipeline stalled project will be replaced with Russia Pakistan under sea gas pipeline project. However, the writer feel the final decision by Pakistani Government will come after the feasibility study of the undersea Russia Pakistan gas pipeline (RPGP), the decision to abort the stalled Iran Pakistan gas pipeline (IPGP) will be a big loss the time involved in both projects IPGP is short time project as compared to (RPGP). Each passing day is crucial for Pakistani Energy crisis.


If we look at the facts that Iran has the 2nd largest reserves of gas after Russia, Pakistan has already signed MoU for 10 billion dollar Russia Pakistan gas pipeline. It is signed in September 2018; MoU is for feasibility study. The construction work is estimated to start in Pakistan by March 2019. It will prove to be game changer for Pakistan Economy.   


In November 2016 China Petroleum Pipeline Bureau (CPPB) expressed readiness to work on the remaining portion in Pakistan’s half as Iran has completed its part that is from Gwadar to Iranian border but the China and Pakistan didn’t reach an agreement.  


Iran also thought claiming for compensation from Pakistan for over 1 billion dollar for not completing the commitment. The cost of laying pipeline from Gwadar to Iranian border is estimated at 1 billion dollars which is less than the compensation.


The present government will have to fulfill its promise it will avert any pressure in the betterment of Pakistan. The Iran Pakistan gas pipeline will be a test case for current government, if they can avert international pressure for the sake of better and prosperous Pakistan.

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