Gas-Shedding: 18th Amendment Strangulating Pakistan


The following article has been published in Daily Nation, dated 29th December 2014

(E-Paper (Print Edition): http://nation.com.pk/E-Paper/lahore/2014-12-29/page-9)

(Online: http://nation.com.pk/business/29-Dec-2014/gas-shedding-18th-amendment-strangulating-pakistan)

Gas-Shedding: 18th Amendment Strangulating Pakistan

Prof Dp

By: Omer Zaheer Meer

Energy is the lifeline of any modern economy and country. The great games of regional and global powers mostly revolve around securing energy sources for their nations due to various other implications. From USA’s past reliance on some Arab countries to China investing heavily in African Nations, these’re all efforts to ensure energy security. The energy needs not only impact a country’s economic outlook but the entire modern national life.

Despite well-known electricity and water woes due to years of mismanagement, Pakistan has been blessed with natural gas reserves commonly referred to as “Sui Gas” by common man, linking it to the largest natural gas field of Pakistan located in Sui, Balochistan. Until recently the mismanagement in this energy sector did not bite the masses much due to abundant reserves discovered in the past. However nothing lasts forever. Unfortunately a lack of strategic foresight, inadequate investments for exploration of more reserves and improper management of limited resources by encouraging CNG fuel have, besides other factors, led to a state of crisis-like shortage of natural gas in Pakistan. The worst affected is Punjab.

As winter approached the gas outages started increasing for domestic, commercial and industrial users. With the winter almost peaking now, the situation has become unbearable with only 4/5 hours maximum availability for domestic users while outage for industries varies in number of days. SNGPL (Sui Northern Gas Pipelines Limited), the company catering to gas supplies in Punjab is facing a shortfall of 700 MMcfd which is almost 27% of the total requirement as per the official Government figures while unofficial sources placed the shortage at 40%.

The impact has been horrible for Punjab. Households are struggling to cook, wash and in some worst affected areas to perform minor tasks as ablution. Industry is hit hard with exports falling resulting in layoffs. All Pakistan Textile Mills Association (APTMA) recently made public plea for exemption from gas load shedding claiming exports of the textile industry alone dropped 4% to $3.4 billion in the last quarter. Textile production has already dropped by 25% in the province due to gas shortages while 2,000 plus surgical manufacturing units have been lying closed too. Many industrialists have threatened to move out if the situation persists. Thousands of households have become unemployed as a result of the above. Agriculture sector while less affected directly due to more reliance on electricity has also been negatively impacted indirectly. This situation is leading to lesser efficiency, unutilized capacities, wasted labor hours, increased unemployment, lost revenue and lost taxes.

To fully appreciate the economic impact one needs to realize that despite abundant claims to the contrary, Punjab actually contributes 65 % of the national GDP and contains 60% of all national industry with more than 48,000 units on record and many unrecorded. It also houses 56% of the national population. We need to ask ourselves whether any country can progress economically while strangulating 65% of its GDP? The answer is an unequivocal “No”. The severe, non-uniformed and negatively biased gas load-shedding in Punjab is effectively leading to an economic strangulation of the national economy. The question then is how did we reach here and what can be done about it?

First of all the 18th Amendment resulted in a highly negative impact for Punjab as the actual needs and population based requirements were totally ignored in favour of giving precedence to the province where a well-head of natural gas was situated over the rest of Pakistan. This apparently was another short-sighted knee-jerk reaction aimed at the unrest in Balochistan province. Secondly the much needed exploration investments were not done on the scale required. Thirdly the scarce resource was wasted mercilessly for short-sighted benefits by encouraging the nation to use CNG (compressed Natural Gas) as alternate fuel to Petrol (Gasoline Fuel). The drive succeeded due to the immense price disparity in the fuels with highly attractive savings on 2.5 times cheaper CNG. Even within CNG sector, mismanagement peaked as licences were issued as if of a local sports club. Last but not the least even the incumbent administration like the ones before it, procrastinated on the steps it decided to remedy the situation. The much trumpeted import of LNG (Liquified Natural Gas) has been delayed to March 2015 per Government sources.

As far as rectifying the situation is concerned many steps are needed. First of all immediate focus should be shifted to serious exploration of more indigenous energy resources. The management of existing resources needs to be planned properly while taking into account the impact of any action-plan upon all sectors of economy and public life. For the short-term the alternate energy sources to be utilized should be quickly planned and spurred into use. A constitutional amendment is also needed to ensure a just treatment across Pakistan. All federating units should bear their share of the brunt to make the situation more bearable for everyone instead of piling up the entire burden on just Punjab. Other federating units should be educated of the overall economic benefits to them as a result of Punjab contributing more to the national exchequer, the benefits of which will be passed on to them in the form of the increased share of income as per 18th Amendment. They should also be made aware that there are already dissenting voices in Punjab questioning whether Punjab should also follow a similar policy at large re crops and right of way as is enforced on it regarding natural gas. This certainly would be a very unwelcome and costly scenario for other federating units.

Another issue to consider is the protection of the consumer. Throughout the world largest consumers are given rights and privileges. However, despite being the largest consumer of power and gas, Punjab has no control over the quantum, duration and usage of either gas or power. This needs to be addressed in manners suggested above and with at least equal if not more say of the largest consumer in the affairs affecting it the most. All people are asking for is a just treatment for everyone as strangulating Punjab is effectively strangulating Pakistan.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, chartered financial analyst, qualified accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

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