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LOW Source:
Pakistan Deaths
Pakistan Cases
1.4% positivity

Pakistan is faced with an acute gas shortage. Natural gas resources, which comprise 50% of the country’s total energy supply, are declining rapidly with no sizeable gas discoveries in sight, in tandem with inefficient use of gas. In an endeavour to manage the country’s acute gas shortage, the Cabinet Committee on Energy (CCoE) has recently proposed a moratorium on gas supply to Captive Power Plants (CPPs) with effect from February. The underlying strategy is to encourage grid electricity consumption while reducing demand for gas. This article seeks to explain why, under the current circumstances, such a policy measure is short-sighted and a focus instead on practicing energy efficient protocols can help alleviate the situation much better.

To begin with, the captive share of gas consumption is merely 8% of the total gas consumed (see Table 1). Moreover, captives’ gas usage is not consumptive but economic, that is, it leads to sustained production, with benefits of employment generation and enhanced exports. CPPs are not necessarily inefficient when compared to Bulk Power Generation. The efficiency of the IPPs (Engro Power, Orient Power, Saif Power, Sapphire Power, Foundation Power, Halmore Power) is 50% at generation level but once the line losses and commercial inefficiencies of the DISCOs are accounted for the efficiency at the point of consumption is hardly 42%. The higher efficiency of the new RLNG based power plants (Qaid-i-Azam thermal plant, Punjab thermal plant, Balloki plant and Haveli Bahadur Shah plant) is net 60% at the generation but reduces to 48% at the consumption level because of the reasons stated above falling for short of the efficiency achieved by Co-Gen units.

Secondly, the government’s policy to encourage grid electricity does not come with a plan to address fundamental issues of competitiveness and affordability. The existing infrastructure is not able to support 3,000 MW of additional electricity to be supplied to the industry resulting in fluctuations and irregular supply that not only result in production losses but also damage expensive equipment. Textile, the single largest contributor to Pakistan’s exports with existing sizeable investments in state-of-the-art machinery and high efficiency generation, has over USD $2 billion worth of investments for expansion and modernization in the pipeline. The potential losses thus accruing to such policy measure are phenomenal. On the contrary, the industry can bring substantial economic benefit from enhanced exports if the gas supply is continued. In other words, even if the approach to shift industry to grid electricity reaps long run benefits, a pre-requisite to implement the same is a meticulous plan to substantially improve grid electricity for a stable, sustained, continuous supply of electricity at regionally competitive tariffs.

There is no doubt that achieving the economic potential of energy efficiency is complex, but Pakistan needs to start somewhere. Acknowledging that the use of natural gas in Pakistan is highly inefficient is the first step. The inefficiencies are in part attributed to large quantities of appliances being produced by small-scale manufacturers that do not meet national or international standards of safety. According to the World Bank, inefficient appliances in the residential sector are estimated to cause gas waste to the magnitude of 30,000 – 40,000 MMCF per year. Industries and utilities that operate on commercial principles must achieve acceptable standards of performance and management – if not, their staff must face the consequences of missing minimum performance standards. Sadly, this is not the case in our country. In 2010-11, the Pakistan Standards and Quality Control Authority (PSQCA) set up a certification programme for appliance manufacturers. Improvements in appliance certification, energy efficiency labelling, and enforcement of standards were deemed necessary. However, while regulations are in place, the enforceability of standards on appliances for sale in the market is weak. If conservation of natural gas is to become a priority, enforceability must be strong.

However, inefficient appliances are only part of the problem. Inefficient use by customers does rest of the damage. Pakistan has the potential to save up to 10-15% (10-12 MTOE) of primary energy supply through energy efficiency, but residential gas consumers have a limited incentive to shift to more efficient appliances because of low gas prices the lowest slab at Rs. 120/MMBTU. Reducing the consumption of gas at consum level by improving efficiency can lead to significant savings on bills as well as decrease the pressure on the government for making the scare resource available. If considered, there is room for exponential savings e.g., 12% efficiency of gas stoves used in households can be enhanced to 36% with a handful of simple measures such as finetuning stoves, replacing their nozzles, switching to high-efficiency cookware like pressure cookers and thermal bags etc. Similarly, gas geysers can be made highly efficient through mandatory use of cone baffles, saving 30% gas. Likewise, a typical solar water heater will save about 7,500 cubic feet of natural gas per year. If all 2 million gas water heaters of SNGPL customers were converted to solar, 15 billion cubic feet of natural gas would be saved. Considering the 173 billion cubic feet of domestic gas consumption in Punjab, this translates into a saving of about 9% annually. Dynamometer tests have measured that CNG-fueled vehicles have 10-15% lower power output than petrol engines, and there is a high cost of conversion (vehicle conversion, natural gas conversion to CNG). Moreover, increased exhaust-valve wear and tear in CNG-operated vehicles are anticipated due to the drying effect of the gaseous fuel.

But if energy efficiency is the outcome, what is the process? In other words, how can the government develop and implement measures to bring it about? In order to develop appropriate policies, strategies, laws and regulatory frameworks to enhance energy efficiency, a multitude of approaches will be required. There will be no “cookie cutter” approaches. Monthly or quarterly audits by SNGPL and SSGC will be necessary to verify approved quality equipment is installed and in use. Penalties in case of violations and inefficiency will have to be encouraged via price signals and incentives. All along, our public will need to be educated on how to reap benefits of efficient usage. The government departments can additionally provide free services to upgrade existing inefficient equipment like servicing or replacing worn-out/damaged parts that can save up to 600 MMCFD of gas. The fact that SNGPL has already undertaken a few successful but limited measures such as cone baffles and smart thermostats for geysers is an encouraging start.

Another silver lining is that policy and research circles are increasingly paying attention to the challenges and opportunities associated with Pakistan’s energy crises. A recent report by the Consortium for Development Policy Research (CDPR) and RAFTAAR, Research and Advocacy for The Advancement of Allied Reforms, for instance, makes recommendations for energy conservation based on their potential scale of positive impact (see Table 2). The gains to gas conservation therein are clear.

In summary, the government’s proposal to suspend gas supply to captive is misinformed and may do more harm than good, at least in the notable future. There are numerous benefits of utilizing gas in captive, including (i) high efficiency, (ii) reliability, unlike grid electricity (iii) no theft, (iv) less burden on national exchequer (there are no financial subsidies) and (v) no drain on foreign reserves. At the same time, prioritizing energy efficiency and directing more efforts towards the same can help reap significant gains. Other South Asian countries like Bangladesh are already promoting efficient use of existing resources, both on the supply and demand side. Pakistan can learn much from their example and endeavour to maintain energy efficiency benchmarks at international standards to save gas and tackle shortages in the short term. Under the existing circumstances, this seems to be the only viable option if Pakistan aims to resolve the perils and problems plaguing the gas sector without compromising the interests and economic contribution of industrial sectors.

(The views expressed in this article are not necessarily those of the newspaper)

Table 1: Sectoral and Provincial Consumption of Gas (%) (2019-20)
Gas Consumed as a Percentage of Sectors (%):
Power                                                          38
Domestic                                                       22
Fertilizer                                                     16
General Industry                                               09
Captive Power                                                  08
Province-wise Gas Consumption (%):
Punjab                                                         51
Sindh                                                          38
KPK                                                            09
Baluchistan                                                    02
Source: Pakistan's Energy Yearbook 2019-20
Table 2: Energy Conversation Measures
                                             Potential Impact
Sr           Energy                    Scale of      Quantitative        High                  Barriers      Possible            Time
             Efficiency                 Impact       Energy              Medium                              Solutions           Required
             Measures                                Saving Estimate     Low
Gas Conversation Measures
1            Tuning                                  Domestic            400-600 MMCFD            H          Currently not       SNGPL/SS            1 - year
             Domestic Gas               Very H       gas demand                                              mandated to         GC to take
             Cooking burners                                                                                 any                 the lead
                                                                                                             organization,       and
                                                                                                             but a               outsource
2a           Conversion of                H          Domestic            360 MMCFD                H          Funding             Concession          2 - years
             domestic gas                            gas demand                                                                  al Finance
             water-heaters to                                                                                                    by SBP for
             solar                                                                                                               installation
2b           Insertion of cone            H          Domestic            200 MMCFD                H          Funding             and recover         1 - year
             baffles and                             gas demand                                                                  cost on
             tuning                                                                                                              instalments
3            Efficient space              M          SNGPL gas           100 MMCFD                M          Funding             SNGPL to            1 - year
             heaters                                 demand                                                                      provide
                                                                                                                                 heaters on
Electricity Conversation Measures of High Impact
4            Conversion to                H          Pakistan's          9.30%                    H          Upfront cost        Financing           1 - year
             Energy Efficient                        Electricity
             Lighting                                Consumption
5            Conversion to                H          Pakistan's          7.70%                    M          1 -Technology       Work with           1 - year
             Energy Efficient                        Electricity                                             improvement         the fan
             Fans                                    Consumption                                             2-Fan               manufacturers
                                                                                                             manufacturers       association
                                                                                                             3-Buy back of
                                                                                                             old fans
6            Conversion of                H          Total               Fuel Savings for         M          1 -Technology       Rural               2 - year
             350,000 low-                            irrigation          30% of all pumps in                 standard            outreach,
             water table (30ft)                      pumps in            Pakistan                            2-High upfront      skills
             irrigation pumps                        Pakistan                                                cost                enhanceme
             to solar                                                                                        3-Specialised       nt, farmer
                                                                                                             maintenance         finance
Sources: CDPR, The World Bank, Asian Development Bank, NEECA, etc.

Copyright Business Recorder, 2021

Author Image

Shahid Sattar

PUBLIC SECTOR EXPERIENCE: He has served as Member Energy of the Planning Commission of Pakistan & has also been an advisor at: Ministry of Finance Ministry of Petroleum Ministry of Water & Power

PRIVATE SECTOR EXPERIENCE: He has held senior management positions with various energy sector entities and has worked with the World Bank, USAID and DFID since 1988. Mr. Shahid Sattar joined All Pakistan Textile Mills Association in 2017 and holds the office of Executive Director and Secretary General of APTMA.

He has many international publications and has been regularly writing articles in Pakistani newspapers on the industry and economic issues which can be viewed in Articles & Blogs Section of this website.

Author Image

Saad Umar

Saad serves as a technical and research lead at APTMA, providing technical and strategic support for textile promotion in Pakistan.

He holds a Master’s degree in Financial Risk Management from University College London (UCL), United Kingdom. He has extensive banking and financial management and planning experience in Pakistan and abroad. He has previously served Relationship Manager roles at Habib Bank Ltd and Bank Alfalah.


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