Speakers at a seminar have urged the government to renegotiate gas price with Iran under Iran-Pakistan (IP) gas pipeline project, saying that as per current agreement Iranian gas will cost Pakistan $15mmBtu which is on the higher side, as Iran, according to them, is already supplying gas to Turkmenistan at the rate of $4/mmBtu.
They suggested to the government that with around 105 trillion Cubic Feet (TCF) local reserves of Shale Gas that can be effectively exploited to meet the country's energy demand, Pakistan should follow the global shale gas initiative. They said that by modernising the existing thermal power plants the efficiency and production of power generation units will increase considerably; as a result, Pakistan's reliance on foreign resources will decrease considerably.
The event was arranged by Sustainable Development Policy Institute (SDPI) to launch its latest research report with a focus to bring the Iran-Pakistan Pipeline under the spotlight, and aims to create a dialogue for re-evaluating Pakistan's Energy Equation. The report is an independent project of SDPI's energy team, in light of existing data.
SDPI report analysed Pakistan's natural gas sector, performance of gas-fired thermal power plants and the Iran-Pakistan pipeline project, and gave specific recommendations based on the report's salient findings. One of its key research elements was a calculation of the real cost of electricity generation after injection of Iranian Gas, at the rate of the prevailing Gas Sale Purchase Agreement (GSPA).
Presenting his report, Engineer Arshad Abbasi, Energy Advisor, SDPI, said that as gas and oil prices have become an outdated phenomenon all over the world with the expansion of shale gas; Pakistan needs to re-negotiate the gas price it intends to buy from Iran. He gave the example of Italy and Germany that took their cases to the International Court of Arbitration for delinking of the oil and gas pricing regarding their gas deals. He said that there was no point for cancellation of the Iran-Pakistan gas pipeline agreement but renegotiations of the gas prices under the prevalent situation under the clause 6.3.2 provided in the agreement.
He maintained that Pakistan has a combined power generation capacity of 24,000MW which it was unable to meet due to scarcity of natural gas supply to its power generation units. As of now, Pakistan has failed to discover new gas reserves, hence it is required to imports natural gas to meet its growing energy requirements. Moreover, natural gas as a resource is of the utmost importance for Pakistan as it makes up for almost 50 percent of the country's energy mix.
While chairing the session, Engr Shamsul Mulk, former Chairman WAPDA/Former Chief Minister KPK drew attention towards consistent policy failures in the energy sector, which had led to the present high costs of electricity. He also asserted that as the cost of electricity generation from oil or coal sources is much higher, natural gas is crucial for Pakistan's energy sector. In this scenario, Pakistan needs to import gas but the importance of mutual benefits regarding the IP project cannot be ignored and Pakistan should not compromise on pricing issues. He stressed the need for building more dams and water reservoirs. Quoting the example, Shamsul Mulk said Egypt managed to survive 7 years long drought with the help of proper water storage system.
Dr Abid Qaiyum Suleri, Executive Director, SDPI while highlighting the SDPI's report on IP project said that it presents an objective analysis of Pakistan's energy scenario while taking into consideration the financial and economic ramifications of the project. He also emphasised the significance of this report and the IP project in the context of US-Pakistan relation as it is believed that Pakistan's Prime Minister will have discussion about the country's energy crisis with his US counterpart in Washington.
Former Ambassador Shafqat Kakakhel, Chairman Board of Governors SDPI said that the report has been launched with the aim to contribute to the ongoing national dialogue over energy security of Pakistan. There is a dire need of improving transmission and distribution system, developing clean sources of energy, controlling indiscriminate spread of gas connection and maintaining smart meters, he maintained.