ACCORDING to reports, the government is seriously considering different options to benefit from the timely offer made by Russian President Vladimir Putin for an LNG pipeline for Pakistan and India to help mitigate the crippling energy crisis in the country. The Russian leader, during his recent meeting with Prime Minister Shehbaz Sharif on the sidelines of the SCO summit offered construction of an LNG pipeline via Iran to Pakistan and then connecting it to India. Minister for Petroleum Musadik Malik is reportedly working on various options for the purpose in view of sanctions imposed by the United States on Russia and Iran.
Gas demand is increasing rapidly in the country but its availability is restrained due to a decline in local exploration and production and our inability to ensure a robust regulatory framework for LNG. The problem has compounded to such a level that domestic consumers face gas load-shedding even in summer when the demand is minimum while the LNG-based vehicles, which were previously provided liberal incentives for conversion to gas, have been left to the mercy of circumstances. The cost of the gas supplied has hiked manifolds for various consumers but still the circular debt is increasing at a rapid pace, reflecting poorly on the overall efficiency of the two gas companies, which enjoy a monopoly in the sector. There are projections that the current gas reserves would last for a maximum of fifteen years if the demand is capped at the existing levels by 2030. In this backdrop, the Russian offer needs to be evaluated properly but on a fast track basis as it offers another viable solution to the growing gas crisis in Pakistan, affecting not only households but also the national economy. The offer has two dimensions as far as its actual implementation is concerned – how to avoid the US sanctions and response of India. Pakistan concluded a gas pipeline agreement with Iran years back but the project could not materialize so far and instead the country is facing prospects of penalty for non-implementation, which has been necessitated by the US sanctions on Iran. Pakistan was not in a position to fund construction of the pipeline on its territory due to its financial health and global institutions were not ready to do so because of sanctions. There was a possibility for execution of the project if Iran provided a loan for the purpose but Tehran is not obliging despite its capacity to do so. However, it is quite evident that the Russian Federation has financial and technical know-how to complete the project if a viable agreement is reached. Our policy-makers must be cautious about the India factor in deciding the fate of the Russian offer because of the maverick approach adopted by New Delhi towards the project for import of gas from Iran, which was originally conceived as Iran-Pakistan-India pipeline. India should be welcomed if it joins the Russian project but Pakistan must evaluate the possibility of its execution otherwise as well. The feasibility study for the Russian pipeline should also take stock of the ground realities – whether or not our internal transmission and distribution network was capable enough to sustain increased inflow if Russian, IP and TAPI projects materialize. This is because of our bitter experience with electricity generation where the country has a surplus capacity but the system is unable to take it to end consumers. It is also a fact that the government-to-government agreement with Qatar for import of LNG eased the gas crisis and offered a long term solution to our growing energy needs but regrettably the arrangement was disturbed due to lack of required vision on the part of the PTI Government. Apart from options to import gas, the government must address security and political issues that hinder exploration activities, especially in Balochistan, where some areas remain unexplored. The government also needs to change the policy of putting the burden of unaccounted for gas (UFG) on consumers and instead put the cost of losses on the distribution companies as this change of policy will help improve their efficiency.
