The “power” in question | Political economics

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SThe suspension of gas supply to the export sector has been compensated by the government by ensuring uninterrupted power supply to industries. However, there are some issues that need to be addressed as a matter of priority.

The government maintains that Pakistan has an excess of electricity and that there is a severe shortage of gas. The exporting sectors use 90 percent of the gas supplied to them to generate electricity and 10 percent for other processes. The gas production mechanism put in place by the exporting industries is very inefficient. In fact, gas-fired power stations in the public sector produce more than twice the power per mmbtu of gas consumed than captive gas-fired power stations installed by export industries. The government considers it unfair to supply gas to inefficient units for inefficient private sector power generation when there is excess energy available in the system.

The government also claims that the shortcomings in the regular supply of electricity have been corrected. The major problem was the lack of power transmission capability which was improved to allow the transmission of more power. In addition, the state supplies imported gas to exporting industries at $ 9 per mmbtu (recently increased by $ 6.5 per mmbtu).

From now on, gas will only be supplied to processing industries where its use is essential. The gas thus saved will be used to operate efficient power stations in the public sector or supplied to domestic consumers (at an increased tariff).

Exporters are skeptical of the government’s claim of a regular and uninterrupted supply of electricity to industries. They point out that many industries have asked for an increase in the electrical load, but electricity distribution companies are not meeting their demand.

Another issue that worries them is that the feeds are not smooth. Many industrial networks need capacity building that has not been achieved. They fear frequent breakdowns. A power outage, even for a minute or two, results in significant losses in many industries. Voltage fluctuations can damage machines. The government should ask electric utilities to immediately increase the electric load.

Electricity distribution companies say frequent fluctuations are a thing of the past now that the grid and transmission lines have been modernized.

An exporter tells TNS that mills used to bribe distribution staff to ensure uninterrupted supply. He thinks the cast staff will likely use the same tricks again. He says factory owners are also bribing gas utility officials to avoid low-pressure gas supplies.

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Gas purchase deals made by the previous government were outraged by the National Accountability Bureau, which accused ministers of corruption but failed to prove the allegations in court. New agreements for improved supplies have been delayed.

The problem of corruption must be addressed through an accountability mechanism. The executive engineer in charge of a network shall be held responsible for any unusual overvoltage or low voltage in the network under his command. The performance data of all shredders should be analyzed. The analysis is likely to reveal that some factories do not experience outbreaks and others experience frequent problems.

Severe measures should be taken in this regard. Employees found guilty of corruption should be expelled. Paying bribes for an interrupted supply of gas and electricity increases production costs. Efforts are needed to fight corruption in the distribution system.

Gas purchase deals made by the previous government were outraged by the National Accountability Bureau, which accused ministers of corruption but failed to prove the allegations in court. New agreements for improved supplies have been delayed.

Pakistan now finds itself with limited national gas reserves. The previous government then concluded an agreement with Qatar at a competitive rate. However, imported gas supplies were not sufficient to meet domestic demand. In times of scarcity, global gas producers increase tariffs. They then supply gas in floating vessels at market rate. The current regime has failed to secure a long-term agreement with Qatar or other suppliers.

The country’s gas storage capacity is also limited as the approval of new storage facilities faces the usual bureaucratic hurdles. The current regime has also concluded gas supply agreements. Some of these agreements were not honored by the suppliers. Instead, they chose to pay the default penalties and still made a profit. Perhaps Pakistani negotiators had struck a flawed deal. Once there was a global shortage, Pakistani buyers were denied contract supplies.

The PTI government also entered into an agreement with exporting industries, especially textile exporters, for an uninterrupted supply of imported gas at a fixed rate of $ 6.5 per mmbtu immediately after power was taken. It did not take into account the possibility of a change in world gas prices. The gas we import is tied to the rate of crude oil in the world market. As the price of oil increases, so does the price of gas.

In addition, the country’s gas supply officials did not reserve the imported gas on time. Gas prices have skyrocketed. The government was already subsidizing imported gas for exporters, but at improved prices it was no longer possible to supply imported gas at $ 6.5 per mmbtu. He increased it to 9 million Mbtu for export industries.

The restriction of gas supply only affects the exporting industries of Punjab. The other three provinces have the right to obtain domestic gas at one third of the tariff for imported gas. These three provinces produce gas and under the 18e Modification are entitled to the first use of the natural resource. Nothing is left to the industries of the Punjab which must depend on imported gas.

The cost of electricity produced from gas in Sindh, KP and Balochistan is therefore much lower than the electricity supplied by the grid. Industries in the three provinces have enjoyed this advantage for over a decade. Punjab’s export sectors got some relief three years ago. Nonetheless, Punjab’s exports continued to grow at the same rate or faster than those of Karachi. The reason is that there are other benefits enjoyed by industries in Punjab that are not available to industries in Karachi or Sindh. Water charges in the Punjab represent a quarter of those borne by industries in Sindh. The Punjab also has a more reliable supply of skilled labor and businessmen in the Punjab do not have to pay protection money to private groups active in Sindh and Balochistan.


The writer is a senior reporter at The News

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