THE government seems to have finally woken up to the adverse impact of the growing energy shortages on the economy, with the prime minister directing ‘expeditious issuance of licences for domestic exploration of gas to meet the increasing demand, especially in winters’.
Presiding over a meeting to review gas shortages in the country on Wednesday, he also ordered the relevant ministries and departments to remove the hurdles in the way of the two planned private LNG terminals and virtual pipeline projects to increase gas imports to fill the supply gap. That the chief executive of the country had to intervene to facilitate the investors waiting for regulatory and other approvals from the government for months and years means that the ministries and authorities concerned are not doing their job properly. Otherwise, the infrastructure schemes for the import of gas would either have been operational by now or near completion. The delays in the grant of approvals on flimsy reasons are a sign that the government needs to urgently overhaul the energy ministry and its attached departments.
At present, Pakistan faces a gas supply gap of 1,300mmfcd. This could have been significantly reduced if the government had allowed the two existing terminals to increase their import capacity by 600mmfcd — something that could be done in a few weeks — and sell directly to industrial consumers without incurring any liability on the exchequer. Likewise, a considerable amount of LPG could have been extracted for domestic consumers had the gas supply to the JJVL plant in Jamshoro not been stopped in 2020.
Because of bureaucratic red tape, we are not able to fully utilise the existing energy infrastructure. On the oil and gas exploration front, the situation is worse. Almost 10 foreign companies have left Pakistan in recent years because of bad policies and bureaucratic hurdles, resulting in declining exploration activities and no new important discovery in the last decade and more.
While the short-term solution to the country’s energy shortages lies in removing infrastructure bottlenecks in order to ensure smooth imports to meet domestic demand, energy problems cannot be tackled in the long term without encouraging exploration of untapped local energy resources. That will not happen unless an ‘ease of doing business’ environment is created for the investors. For that, we need a long-term, holistic energy policy and a responsive energy bureaucracy. Or we can keep rationing the available gas and spend precious foreign exchange on imports.
Published in Dawn, December 31st, 2021