Published Date: Oct 24, 2013
Dialogue urged to re-evaluate Pakistan’s energy needs
Sustainable Development Policy Institute (SDPI) launched its latest
research report here on Wednesday, seeking to bring the Iran-Pakistan
Pipeline in the spotlight, and aims to create a dialogue for
re-evaluating Pakistan s Energy Equation. The report is an independent
project of SDPI s energy team, in light of existing data.
SDPI report analyzes Pakistan s natural gas sector, performance of
gas-fired thermal power plants and the Iran-Pakistan pipeline project,
and gives specific recommendations based on the report s salient
findings. One of its key research elements is a calculation of the real
cost of electricity generation after injection of Iranian Gas, at the
rate of the prevailing Gas Sale Purchase Agreement (GSPA).
Presenting the report, Engr. Arshad H. Abbasi, Energy Advisor, SDPI,
said that as gas and oil prices have become an outdated phenomenon all
over the world with the expansion of shale gas; Pakistan needs to
re-negotiate the gas price it intends to buy from Iran. He gave the
example of Italy and Germany that took their cases to the International
Court of Arbitration for delinking of the oil and gas pricing regarding
their gas deals. He said that there is no point for cancellation of the
Iran-Pakistan gas pipeline agreement but renegotiation of the gas prices
under the prevalent situation under the clause 6.3.2 provided in the
To substantiate his argument Arshad Abbasi said according to the
agreement rate for Pakistan is more than $15/ MMBTU if calculated in
relation to the current JCC prices though Iran is supplying gas to
Turkmenistan at a rate of $4/ MMBTU.
He maintained that Pakistan has a combined power generation capacity
of 24000 MW which it was unable to meet due to scarcity of natural gas
supply to its power generation units. As of now, Pakistan has failed to
discover new gas reserves, hence it required to imports natural gas to
meet its growing energy requirements. Moreover, natural gas as a
resource is of the utmost importance for Pakistan as it makes up for
almost 50% of the country s energy mix.
Giving recommendations, he suggested that with around 105 TCF
reserves of Shale Gas that can be effectively exploited to meet the
country s energy demands, Pakistan needs to follow the global shale gas
initiative. He was of the view that by modernizing the existing thermo
power plant the efficiency and production will increase considerably, in
the result; Pakistan s reliance on foreign resources will also
While chairing the session Engr. Shamsul Mulk, former Chairman
WAPDA/Former Chief Minister KPK drew attention towards the consistent
policy failures in the energy sector, which have led to the present high
costs of electricity.
He also asserted that as the cost of electricity generation from oil
or coal sources is much higher, natural gas is crucial for Pakistan s
energy sector. In this scenario, Pakistan needs to import gas but the
importance of mutual benefits regarding the IP project cannot be ignored
and Pakistan should not compromise on pricing issues. He stressed the
need for building more dams and water reservoirs. Quoting the example,
Shamsul Mulk said Egypt managed to survive 7 year long drought with the
help of proper water storage system of storage over Aswan.
Earlier, in his welcome remarks, Dr. Abid Qaiyum Suleri, Executive
Director, SDPI highlighted that SDPI s report on IP project presents an
objective analysis of Pakistan s energy scenario while taking into
consideration the financial and economic ramifications of the project.
He also emphasized the significance of this report and the IP project in
the context of US-Pakistan relation as it is believed that Pakistan s
Prime Minister will have discussion about the country s energy crisis
with his US counterpart in Washington. Dr. Suleri said that the report
gains significance also from the fact that Pakistan will have to
consider the international natural gas scenario and the position taken
by United States given its diplomatic relations with Iran.
Former Ambassador Shafqat Kakakhel, Chairman Board of Governors SDPI
said that the report has been launched with the aim to contribute to the
ongoing national dialogue over energy security of Pakistan. There is a
dire need of improving transmission and distribution system, developing
clean sources of energy, controlling indiscriminate spread of gas
connection and maintaining smart meters, he maintained.
He said Pakistan has already witnessed capital flight due to energy
crisis Pakistan as a lot of textile units had already shifted to
Bangladesh that has also caused massive un-employment in the country.