AIRLINK 62.48 Increased By ▲ 2.05 (3.39%)
BOP 5.36 Increased By ▲ 0.01 (0.19%)
CNERGY 4.58 Decreased By ▼ -0.02 (-0.43%)
DFML 15.50 Increased By ▲ 0.66 (4.45%)
DGKC 66.40 Increased By ▲ 1.60 (2.47%)
FCCL 17.59 Increased By ▲ 0.73 (4.33%)
FFBL 27.70 Increased By ▲ 2.95 (11.92%)
FFL 9.27 Increased By ▲ 0.21 (2.32%)
GGL 10.06 Increased By ▲ 0.10 (1%)
HBL 105.70 Increased By ▲ 1.49 (1.43%)
HUBC 122.30 Increased By ▲ 4.78 (4.07%)
HUMNL 6.60 Increased By ▲ 0.06 (0.92%)
KEL 4.50 Decreased By ▼ -0.05 (-1.1%)
KOSM 4.48 Decreased By ▼ -0.09 (-1.97%)
MLCF 36.20 Increased By ▲ 0.79 (2.23%)
OGDC 122.92 Increased By ▲ 0.53 (0.43%)
PAEL 23.00 Increased By ▲ 1.09 (4.97%)
PIAA 29.34 Increased By ▲ 2.05 (7.51%)
PIBTL 5.80 Decreased By ▼ -0.14 (-2.36%)
PPL 107.50 Increased By ▲ 0.13 (0.12%)
PRL 27.25 Increased By ▲ 0.74 (2.79%)
PTC 18.07 Increased By ▲ 1.97 (12.24%)
SEARL 53.00 Decreased By ▼ -0.63 (-1.17%)
SNGP 63.21 Increased By ▲ 2.01 (3.28%)
SSGC 10.80 Increased By ▲ 0.05 (0.47%)
TELE 9.20 Increased By ▲ 0.71 (8.36%)
TPLP 11.44 Increased By ▲ 0.86 (8.13%)
TRG 70.86 Increased By ▲ 0.95 (1.36%)
UNITY 23.62 Increased By ▲ 0.11 (0.47%)
WTL 1.28 No Change ▼ 0.00 (0%)
BR100 6,944 Increased By 65.8 (0.96%)
BR30 22,827 Increased By 258.6 (1.15%)
KSE100 67,142 Increased By 594.3 (0.89%)
KSE30 22,090 Increased By 175.1 (0.8%)

One step ahead, too many backwards! That has been the story of the ill-fated Iran Pakistan (IP) gas pipeline for years now. It appears that the inactivity on part of Pakistan finally got noticed by the Iranians as the Iranian Oil Minister hinted at the likelihood of annulling the gas supply contract with Pakistan.
Too bad! Well maybe not! Pakistan has hardly made any concrete progress to lose much, should the Iranians officially cancel the deal. That the comments from Iran have just come days after the PM’s visit to the USA and a joint meeting with UK and Afghanistan leaders, may just be a coincidence. Or if you are one for conspiracy theories, all of it may not be just a coincidence.
America’s disapproval of the IP gas project is well-documented and experts close to the IP deal in the past have time and again maintained that this deal would never materialise and Pakistan is just biding time. If that’s the case, officials in Islamabad may well heave a sigh of relief that it was Iran initiating the cancellation of the IP project.
A lot has been said and written about the pricing of imported gas from Iran and how it is costlier to the country’s energy mix, even terming the deal as a ‘death sentence’. Pakistan’s prominent policy research institute, the SPDI held a seminar on the same topic a few days back titled “Rethinking Pakistan’s energy equation” focusing on the proposed IP gas pipeline.
There is no denying that the world is a different place after the USA shale revolution, altering the dynamics at a large scale. That said Pakistan’s quench for more gas for a balanced energy mix and affordable solutions cannot be undermined.
That the gas pricing should now be de-linked with oil prices carries weight but it should not become the basis of scrapping the whole deal and asking for renegotiation, without having an alternative. Gas at $14/mmbtu from IP is no doubt not the cheapest option, but comparison with domestic gas prices does not hold weight enough.
Experts have long argued that Pakistan has no option but to gradually rationalise gas tariffs domestically in order to use imported gas in the energy mix. The other available option is that of LNG imports, which too, is moving at a pace that would even make a snail proud. LNG imports from Qatar would cost Pakistan around $18/mmbtu. In order to integrate imported gas in power generation mix, price rationalisation will have to take place by using weighted average cost.
Agreed that these are not the best options in an ideal scenario, but then Pakistan’s energy situation is far from ideal. For short-term fix, LNG imports are a must. For gas imports, IP would have been a good choice, still cheaper than the dollars the country spends on importing the expensive furnace oil. Yes, hydro-power is the most viable and cheapest solution, but it is not happening anytime soon and Pakistan would require billions of dollars to fund mega hydro projects.
Similarly, the treatment of coal as ‘dirty fuel’ even by the country’s own research institutes, would not serve Pakistan any good. Pakistan’s regional players have significantly high portion of coal in their energy mixes, Pakistan should be the last country to be worrying about carbon footprints, given the precarious situation it is in.
One hopes that Islamabad clarifies the picture and let the people know once and for all that IP is not happening, not anytime soon and, maybe, not ever. It is time to strategise and look for whatever options are around. Energy at any cost, not cheap energy should be the priority at least for the short term.

Comments

Comments are closed.