Diversifying gas use

A gas crisis has been caused by continuously depleting local gas resources, and rising LNG prices. Cheaper local gas supplies will continue to decrease due to lack of any major success in finding new gas over the last several decades. Small discoveries have been made. It would be advisable to reduce dependence on gas and diversify into the equivalents and substitutes. In this space, we will explore the following: what can be done in this respect?

There are three energy user classes: 1. Urban High Income (UHI); 2. Low and Middle Income Urban and Semi-Urban (LMIUSU); 3. Low Income Rural (LIR). The first group, UHI, lives in posh areas with plot sizes of 500 sq.yds or more. In some areas, the average plot size has come down to 250 sq.yds. There are high rise posh apartment complexes as well. They can probably pay high or very high prices for energy which they are already doing under present tariff system. UHI has many options. It can switch to electricity and LPG. It can install air-conditioners which provide both heating and cooling. It can install roof top solar and water heaters. It can switch to electrical water heating. Their current problem is that they are significantly hooked on piped gas for cooking, heating and water heating. Geysers are gas guzzlers. During this crisis, many have shifted to other options. It is an issue of improving the availability of other options, logistics, supply chain systems and information. Both prices and non-price instruments (such as continued low supply and pressure) can be used to discourage this segment away from gas.

The real sufferers are the residents of low income urban and semi-urban areas. Their typical income may be from Rs 50,000 to 100,000. They live in small houses and apartments in formal or katchi abadis. A very large portion of them lives in semi-urban and rural areas expanding at a fast rate. It is a large and politically active population segment. They are office workers, industrial workers and small traders. It has practically no option except cheap electricity and gas. They can’t buy or afford LPG which is priced several times higher than their gas bill rates. Most gas subsidy goes to this class and would continue to be so. A non-civilian government can ignore this sector. Expansion is taking place in it and new gas demand will also come from this sector. There is a case for gradual enhancement of its low gas tariff, particularly in the expensive LNG regime whose share is increasing by the day. This group may use biomass efficient and clean stove where living conditions permit. It can be a viable substitute for piped gas for this class as we shall discuss later. They (Rs 50,000 and above living in small single or double-story houses and portions) may also install one or two solar panels as well if there are credit schemes.

There are around 33 million households in Pakistan. It may be noted that only 25% of the population (around 10 million connections) gets piped gas due to limitations on network expansion. By contrast, there are 30 million domestic gas connection, i.e., 90% of the population has electricity connections. Rural population almost entirely depends on unorganized biomass in the form of tree trunks, shrubs, etc. A small portion uses LPG, Charcoal and Kerosene. Rural areas do have a higher income class which can install solar facilities and have done so already. They will almost never get system’s piped gas both due to physical and investment reasons. Biogas and biomass efficient stoves are their solution.

1. Current choolah practice is unhygienic, causing indoor and outdoor pollution. It breeds chest diseases. Use of uplahs is dirty and its continued handling manually by the rural women in this time and age should be shameful for society at large. Biomass collection on the other hand is time consuming. Tree- cutting causes deforestation; it has implications on environment and climate change as well. In India, there is a system of LPG subsidy which is almost 50% of the normal price.

Lately, biomass-efficient stoves have been developed and deployed in many parts of the world with varying level of success. These stoves do not produce smoke and are run on biomass pallets. These stoves can also be used for improvised heating due to their non-smoking characteristics. Some market of this system has already developed in Pakistan. However, these stoves are expensive varying between Rs 4000 to Rs 7000. Pallets are being sold at a price of Rs36 per kg. One kg per day may be sufficient for an average family.

An organized and government supported programme may be able to bring down the prices and improve affordability. A network of 100-200 biomass pallet producing programme may go a long way towards energy supplies of the 70% population of this country. A biomass plant costs around Rs.2 million. It can generate substantial economic activity and employment in the rural economy, saving time and improving health conditions. Gas companies and traders can be used as delivery vehicles for a large biomass programme. Some portions of urban poor living in semi-urban areas can also benefit from this. It can go a long way towards solving the energy problems of the poor.

Biogas has tremendous potential. It has been estimated that there is a potential of production of some 600 mmcfd of biogas. Pakistan is a one of the largest milk producers and consumers in the world. There is a large milk and livestock sector contributing some 20% to the Agricultural GDP. There are two types of biogas; raw and processed. Raw biogas contains some 50-60% methane and is good enough for domestic heating. It can be produced in smaller home plants and medium-sized community plants. Community plants can install small distributed pipe systems as well.

Biogas can also be processed and cleaned to pipeline quality standards. In Germany and elsewhere it is being done already. There was a time when the EU had a target of supplying 0% of its gas requirement from biogas. The emergence of solar has diluted this target. In the high priced LNG times biogas can add to energy security and help save foreign exchange. For price reasons, CNG sector can be ideal for getting involved in this. They will become independent of piped gas and earn both from producing and selling the biogas. A government policy and programme may hasten the development of this market sector. The government-owned companies have launched an initiative in this respect. However, the momentum is lacking.

There is a considerable potential for saving gas consumption in the water heating sector. Current gas geysers are gas guzzlers. Solar Water Heater (SWH) can easily substitute geysers through a government policy and credit scheme. Local production can increase economic activity and save foreign exchange.

The power sector should gradually come out of gas consumption and rely more on alternatives like Thar coal and alternative energy. There is almost a monopoly on Thar coal which should be diversified by induction of other private sector which would help expand Thar coal to the industrial sectors such as cement. Cement sector imports a large amount of coal exceeding 500 million USD per year. Thar coal gasification is another option worth pursuing under the China Pakistan Economic Corridor (CPEC) programme.

LPG market can be expanded through organized and unorganized imports from Iran and Central Asia. Border markets can be very helpful, some of which have been discussed lately in the context of helping Balochistan. Aforementioned steps can go a long way in reducing the intensity of the problem.

(The writer is a former Member Energy and author of several books on the energy sector)

Copyright Business Recorder, 2021