It is ironic that the country's reserves of natural gas were fast depleting over the past decade or more and still there was no fool proof planning effort that had enabled the much-needed replenishment to support the on-going growth scenario.
It now appears that the non-availability of natural gas (and consequently the affordable electrical power) is going to hamper the economic activity. Redressing of such a situation takes a lot of time than normally anticipated thus having a further detrimental effect on the progress of all those sectors that rely on natural gas either as source of energy or as feedstock. As such, delay in materialising the imported gas pipeline projects is another example of ill planning and above all not foreseeing the looming crises in a meaningful way.
Notwithstanding the facts about the 'real' progress on this dream pipeline from Iran to India via Pakistan (IPI) by these countries, Pakistan wanted to also suddenly progress after realising that its own efforts to slow the progress on IPI will take its toll very soon.
It is strange that Pakistan is always on the forefront when it comes to losing out on opportunities which later become either too expensive to consider or at times not available at all. To start with, it would be very interesting to note the ground realities, which are a bit unique and different from the usual mechanics of the projects of such magnitude, namely:
IRAN: natural gas exports (both piped gas and LNG) are low on their agenda primarily to save it to use for oil extraction by re-injection in the oil reservoirs and the remaining to feed the power industry, industrial and vehicular use etc. Since the economy largely depends upon oil exports, natural gas use in secondary recovery takes priority.
Nonetheless, Iran will only be able to sell if given a very attractive price for a sustained delivery period and assured of resolution of all geo-political issues. On the other hand, it must not be assumed that Iran may not have adequate alternatives for the use of natural gas available for export through pipeline.
PAKISTAN: the country has suffered the most by not initially making use of gas allocations from Qatar's huge north field; spending resources unnecessarily on Turkmenistan and then not optimally and proactively pursuing the Iran option. The whole game has been in some very naïve heads of national gas utilities, heads of relevant ministries and energy advisors who were not able to fully comprehend what's ahead for the country - it is a recorded fact that import of LNG was not included as the 4th gas import option up till mid 2004.
Deliberate efforts were made by the concerned to delay the piped gas import projects considering that it may allow Pakistan a better negotiating option; this strategy miserably failed. As a result, some continued with their lucrative jobs and availed options of merry go round the globe on the pretext of finding energy solutions but Pakistan remained carrying the begging bowl obviously waiting for the luck to strike.
Neither gas import project through pipeline or LNG materialised in the most important past 5-7 years of energy deprivation. This situation reminds of a saying that "God helps who help themselves". Previous accessible option of affordable gas from Qatar was wasted by the pundits very conveniently and is haunting the Pakistani nation now.
INDIA: India is far ahead in the planning process in their national interest, India managed to expand its LNG network of importation and distribution extensively apart from investing in the entire value chain. Other chosen direction was the rapid development of the onshore and offshore exploration (Krishna Godawari Basin to say the least) potential which has been most successful providing adequate steps to fuel the growing economy.
Accordingly, the gas import option from India via a pipeline as given in the India's future initiative is completing in 2015-16. This indicates that imported piped gas is not considered by India as something of urgent consequence and hence not in a hurry to conclude any agreements which at this stage would only help Pakistan. It would be a possibility that Pakistan gets gas from the same pipeline (and at a shorter distance) at a higher price on heating value basis than India.
After the above background narrative, it would not be very difficult to figure out why we failed in initiating and concluding dialogues with the Iranian and Indian authorities; why the responsible people are not held accountable for not achieving the results they were entrusted upon to achieve and left the country in an unavoidable lurch; why people in Pakistan leave with incomplete assignments and clean their slates; why the same people at helm of things are seen again and again when they did not produce results earlier, and the list goes on.
According to analysts, failure in delivering the results on issues of national consequences lies more on the energy planners including the energy advisor and officials of planning commission than any one else. Obviously, the abrupt and un-ceremonial departure of the previous energy advisor indicates that he was not required anymore.
Question arises that what was he doing (apart from giving presentations made by a consulting firm in Islamabad); what were his deliverables and the monitoring results, if any? Our government does not think of the commitment level of professional while appointing them at these key positions. Appointing people with low or nil commitment levels during the most crucial times for the country has turned out to be a very damaging and expensive proposition which the country will continue have to pay for may be a few decades.
Unfortunately the gas utilities drained the organisations with losses galloping to phenomenal limits, profits nose diving, neglect of employees resulting in disgruntled workforce with low moral, impinged court cases, no tangible progress on gas import projects and the list goes on except exceptional coverage of cycling events, own publicity, world tours and inauguration ceremonies of gas connections in Sindh, Balochistan and Punjab. People at the helm of affairs with over 35 years of experience are not adding any value to the companies any more neither are of any use to the government for advancing the future outlook.
Now comes another classic game plan of using the platform of Interstate Gas Pipeline Systems Limited (IGSL) to further not only malign the governmental standing in the eyes of outside world but making sure that the project does not kick-off, at least economically.
Established as a JV of two gas utilities (SNGPL 51% and SSGCL 49%), IGSL was supposed to materialise the gas import projects in Pakistan. Due to political influences and vested interests of other companies, LNG was kept away from the clutches of IGSL. A senior general manager of SSGCL was hurriedly appointed as MD of IGSL in 2005 without the consultation or approval of Petroleum Ministry. With this appointment, he had to pledge to support and to toe a certain line with respect to handling of the project in a specific way.
The government does not even know if the present progress on the IPI is in line with the progress made by Iran or India and that the Pakistani plan is meshed-in well to avoid wasted of time and certainly most precious financial resources. Various important aspects of this mammoth project are still at various stages of discussion only including but not limited to trilateral project handling issues, transportation tariff and gas volumes, transit fee finalisation, joint declaration, intergovernmental agreements, key clauses of gas sales and purchase agreement, project structure and agreement, project coordination aspects, and time line etc.
IGSL sometime back had invited applications from international companies for prequalification to conduct the feasibility studies (FS) and to later on carry out the front-end-engineering and design (called FEED). This prequalification process was done primarily on a criterion to ensure that only one company gets selected for the eventual award. Credible reports indicate and also the insiders are not happy with the way company is managed and on the basis of anonymity have revealed that the multimillion job is manoeuvred to be given to an Australian company, namely, Worley Parsons.
It can be well imagined the cost and time on which the job will be awarded to this Aussie company having deep roots in Islamabad. It may be noted that another Australian company, BHP Billition considers itself as the leading contender for the EPC part. A source close to Petroleum Ministry, on the basis of anonymity, has informed that a case is being made to accommodate this company on sole source basis.
A senior governmental official strongly feel that the job should not be awarded in haste especially in this politically volatile environment and the fact that the forward players are gone. Ideally, the whole process of prequalification and award needs to be thoroughly reviewed with full confidentiality (and by professionals) to not only ensure 100% transparency but also cost competitiveness. After all, it is most sacred money of our poor country. We need to see that a specific company with connections is not favoured when the stakes for the government are far too high!
In the light of some more reported delay in the negotiations process, it would be advisable not to go for bidding at the prevailing volatile situation in the country and wait for the new government to be installed and able professionals are placed at the key positions to take it further in a systematic way. The fresh bids hopefully would have reduced price tags in the politically stabilised situation than the ones offered now that must have in-built cushions for security risks coverage, delays, uncertainties etc.
It is hoped that sense would be prevail and the planners will ensure that all costs incurred on the delayed option of IPI are kept at a minimum - to at least cover some lost grounds.
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