Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC) are implementing programmes to reduce gas losses in distribution and both companies are replacing 300 km of distribution lines each year. However, at this rate, it will take long time to replace and/or rehabilitate all of the networks. According to official sources, Pakistan government is therefore looking for ways to enhance the pace of these replacement/rehabilitation programmes.
The gas utilities are provided a time frame for bringing down the UFG level to internationally accepted standards, but have not been able to deliver the annual improvements. Pakistani authorities have requested the World Bank to review the proposed "Natural Gas Production Enhancement and Efficiency Project (NGPEEP)" for possible World Bank financing. No other donors/financiers are at the moment making funds available to the gas sector.
World Bank has agreed to provide technical assistance for capacity building and policy support to Pakistan and will provide four million US dollars to design a gas usage optimisation strategy based on a combination of national priorities and economic costs and benefits, implementation efficiency, and conservation measures. Enhance institutional capacity in petroleum sector governance, including the regulatory authority (OGRA).
To address the electricity shortages, Pakistan government has taken steps to fast-track the development of additional power generation capacity. Two medium-sized plants of 165MW and 225 MW, owned by independent power producers (IPPs), have recently been added, and a further 450 MW (in 2 IPPs) are likely to be added in 2010. The fast-track IPP projects and new, mostly oil-fuelled rental plants were expected to add about 2,000 MW of new capacity by end of 2009; however, seven of the rental plants, totalling about 1000 MW, will be delayed. Thus, loadshedding is likely to continue in 2010 as well.
In view of the weak fiscal position, the government is no longer able to subsidise the power sector to the same extent as in the past, and it has (a) committed to restrict subsidies to the power sector to Rs 55 billion (US $670 million) in FY10 and to cease all operating subsidies from the subsequent fiscal year.
Furthermore, the government has (b) amended the legislation to automatically (on a monthly basis) pass through to the end any changes in fuel prices and also make other quarterly tariff adjustments to cover changes in non-fuel costs; (c) agreed to allocate more gas to the power sector, thereby improving efficiency and reducing cost by diminishing the need to run the oil-based power plants; (d) taken on itself the burden of public policy-induced liabilities that were earlier vested with the power companies - by assuming debts and other liabilities that the power sector companies had incurred during FYs 07-09 to finance their operations; and (e) agreed with the above finance institutions to increase electricity tariffs by overall about 26 percent in the period from October 2009 through June 2010. Power tariffs were increased by 6 percent on October 1, 2009, by 12 percent on January 1, 2010, and further 6 percent increased in April 2010.
World Bank Project survey report revealed that Pakistan is quite well endowed with energy resources. An estimated 54 trillion cubic feet (TCF) of gas reserves have been discovered to date, and about 32 TCF (about 900 bill. m3) remain unproduced. In 2008, domestic gas production was about 1.3 TCF (37.5 bill. m3). About 937 million barrels of oil have been discovered, of which 354 million barrels remain unproduced.
The coal reserves are estimated to 185 billion tonnes, nearly all located in the Thar Desert in Sindh province. Notably, Pakistan also has a hydropower potential of about 40,000 MW, of which about 6,450 MW has been developed - the remaining economically exploitable potential is around 20,000 MW (or more as alternative fuel costs rise).
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