In a time that demands harmony at national level, the Ministry of Water and Power and the Ministry of Industries and Production - have locked horns over the use of natural gas for the power sector.
It all started with the request made by Ministry of Industries and Production to the ECC to disallow additional gas allocation to a certain rental power plant in Sindh. The very next day, power minister Raja Pervez Ashraf took an entirely different route by revealing his intent to bring in more gas based power projects to combat electricity shortage.
Perhaps the power minister needs to look at the picture of natural gas consumption pie which explains Pakistans lackluster industrial growth in the past years to a certain extent. Power sector had a one-third share in total gas consumption five years ago, which has now surged to 40 percent mainly at the expense of industrial gas consumption that has slid down from 25 percent then to 19 percent now.
Pakistans natural gas production has grown at an average rate of 3.5 percent during the past five years and is expected to grow at the same pace in next few years. In contrast, government officials expect the demand to grow around 9 percent per annum in the years to come - presenting a huge vacuum that demands better allocation of gas to different sectors in such a way that it aids the ailing industrial sector.
What makes the already heavily criticized RPPs more questionable in this context is the fact that those which are in operation and the others which will soon be in operation do not have dual fuel arrangements. This coupled with the fact that the Power Ministry has proposed a firm uninterrupted gas allocation to power sector instead of as-and-when-available basis means that industrial units, which mostly use gas as a feed, will be deprived of it.
It is not as if there is no solution to the problem. The solution, in fact, and quite frankly is a no-brainer. A huge portion of Pakistans proven gas reserves is expected to be exhausted soon - something that calls for a shift in policy to invest in coal-fired power plants than further denting the industrial growth by introducing gas-fired ones. Other alternative sources such as hydroelectricity and wind power need to be beefed up soon as well.
But whats the short term fix then, one may ask. Well, thermal electricity generation is the way out in the near term as this would provide enough room for uninterrupted gas supply to the industries, especially those who use the gas as feed instead of fuel.
Some may argue about the resulting escalating import bill and higher tariffs in that case but here is the thing: gas based electricity is not going to be any cheaper from January 2010 any way, following OGRAs proposal of an 18 percent increase in gas tariffs.
The ministrys firm stance on fuelling the power sector with gas might be a reflection of Ashrafs promise to do away with load shedding by the end of 2009, the unlikelihood of which seems to be triggering such unwise decisions. One hopes that sanity will prevail at least this time around unlike few of other unpopular decisions taken by the Power Ministry - especially when the gas recoverable reserves are fast depleting with only 17 years of life ahead.
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