Daily Times

As winter descends upon the country and the cold creeps in, many find themselves in the midst of an acute energy crisis. This year has been challenging for Pakistan as global gas prices have skyrocketed in the wake of Russia’s invasion of Ukraine; creating a dire gap between demand and availability.

A source of great pride for the nation, our domestic reserves have drastically suffered from a decrease in gas exploration in the last two decades, which has propelled the government to turn to the international market to meet its colossal gas demand. However, this year, rising LNG trends in the global market have left the country incapacitated as it is unable to import LNG at a reasonable price.

In the past, low gas prices have incentivized people to use gas inefficiently; resulting in a gradual depletion of the country’s own gas reserves, which is yet to be compensated via increased investment and extensive production. Indeed, the cost of supplying gas to households is substantially higher than supplying the same to the power sector-the state’s failure to account for this has culminated in the situation we find ourselves in today.

On top of all this, we have made no noteworthy gas discoveries in recent years; “there are only four exploratory wells per 1000 sq km, three times less than the world average.” Security concerns in Khyber Pakhtunkhwa and Balochistan, most notably, in the Pishin Basin have compounded the problem, due to the government’s unwillingness to invest resources in the area.

Since gas distribution and transmission are handled primarily by two-state owned companies-Sui Southern and Sui Northern-the government appears to have developed a monopoly over gas production; discouraging private investors from exploring more gas. It must also be noted that the government is the only authority importing LNG at the moment. This limits competition severely while creating unnecessary bureaucratic delays that make the import process longer and more protracted. All gas activities are under government control; taking power away from independent regulators and resulting in cross-subsidies and massive fiscal and forex liabilities. Unless the government reforms its gas pricing mechanisms and allows for greater levels of investment, we will continue to ride this gas shortage for years to come. *