How to meet gas shortages

Pakistan and Turkmenistan inked five agreements including an agreement to purchase gas under the well-known Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project in a ceremony held at the Prime Minister's House. President Asif Ali Zardari expressed satisfaction over the accord and urged the visiting Turkmen President Berdimuhamedov to consider currency swap agreements, preferential tariff agreements and a free trade agreement to enhance bilateral economic ties between the two countries. One would unreservedly endorse the President's vision as reflected in his proposals however, one would be compelled to advise caution as many a signed bilateral agreement has failed to be implemented. In the specific TAPI context such caution is more than justified given that this project continues to stall since 1995 when the original Memorandum of Understanding was signed between Turkmenistan and Pakistan; and this is in spite of what is acknowledged as a win-win situation for all participating countries as TAPI envisages export of energy from the energy-rich Central Asia to the energy-poor South Asian countries. While one major impediment, Russia's opposition to the project due to its geopolitical considerations has evaporated recently and it has indicated a desire to participate in the gas pipeline project, yet laying an expensive pipeline through Afghanistan remains a risk which would require a careful assessment/evaluation of how much risk would be borne by which country in the event that a section of the gas pipeline is blown up. Similar concerns apply to the purchase of excess hydel electricity produced by Tajikistan and Kyrgyzstan during the summer months under the CASA 1000 project though, again, one would fully support the approval of a Memorandum of Understanding by the Pakistani cabinet with respect to import of electricity from these two countries. The support for these projects is overwhelming within Pakistan given the fact that gas shortages affect not only the generation of electricity but also impact on households in upcountry areas during the cold winter months, on domestic fertilizer industry that is compelled to close down for three months a year as part of the government's gas shedding management plan (which in turn, requires an increase in import of fertilisers with its consequent impact on input and output costs) as well as the shortage of CNG as vehicular fuel. There is thus an urgent need to meet the energy shortfall. While the government must be supported in its efforts to begin implementation of the TAPI and the CASA 1000, yet the fact remains that these are long-term projects at best and would require a few years after implementation commences. In other words, there is a need for the government to begin reforms in its energy sector in earnest at once. Dr Asim Hussain, Minister for Petroleum and Natural Resources, has been working on the Iran-Pakistan gas pipeline project as well but concerns remain that the US opposition would ensure that the project never gets implemented. The government of Pakistan would be compelled to consider 1.5 billion dollar annual assistance by the United States as part of the Kerry-Lugar bill - assistance that has not achieved its target yet due to recent confrontational rhetoric between the two countries - and balance it against the benefits of the IP gas pipeline project. There are few if any takers that the government would opt in favour of the IP as opposed to the US. It is unfortunate that the Pakistan government continues to proactively support projects that are entwined in regional politics of the sole superpower. One would hope that the government undertakes home-grown measures designed to deal with the energy crisis. The blueprint for reform has been provided to the government by multilaterals as well as the US however it keeps on playing a destructive political game by not focusing on reducing line and transmission losses, the highest in the region, not enforcing payment of bills by the government departments but instead on raising tariff to appease donors but backing down from a tariff that brings the people onto the streets. In short, the government has opted for compromise and like most compromises leaves everyone dissatisfied. Copyright Business Recorder, 2011