Published Date: Oct 24, 2013
Speakers urge government to renegotiate gas price with Iran
Speakers at a seminar have urged the government to renegotiate gas price
with Iran under Iran-Pakistan (IP) gas pipeline project, saying that as
per current agreement Iranian gas will cost Pakistan $15mmBtu which is
on the higher side, as Iran, according to them, is already supplying gas
to Turkmenistan at the rate of $4/mmBtu.
They suggested to the government that with around 105 trillion
Cubic Feet (TCF) local reserves of Shale Gas that can be effectively
exploited to meet the country’s energy demand, Pakistan should follow
the global shale gas initiative. They said that by modernising the
existing thermal power plants the efficiency and production of power
generation units will increase considerably; as a result, Pakistan’s
reliance on foreign resources will decrease considerably.
The event was arranged by Sustainable Development Policy
Institute (SDPI) to launch its latest research report with a focus to
bring the Iran-Pakistan Pipeline under 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 analysed Pakistan’s natural gas sector, performance
of gas-fired thermal power plants and the Iran-Pakistan pipeline
project, and gave specific recommendations based on the report’s salient
findings. One of its key research elements was 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 his report, Engineer Arshad 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SDPI, said that as gas and oil prices have become an outdated phenomenon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 was no point for cancellation of the
Iran-Pakistan gas pipeline agreement but renegotiations of the gas
prices under the prevalent situation under the clause 6.3.2 provided in
He maintained that Pakistan has a combined power generation
capacity of 24,000MW 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 is 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 percent of the country’s energy mix.
While chairing the session, Engr Shamsul Mulk, former Chairman
WAPDA/Former Chief Minister KPK drew attention towards consistent policy
failures in the energy sector, which had 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 years long drought with the help of proper water storage
Dr Abid Qaiyum Suleri, Executive Director, SDPI while
highlighting the SDPI’s report on IP project said that it presents an
objective analysis of Pakistan’s energy scenario while taking into
consideration the financial and economic ramifications of the project.
He also emphasised 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.
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.