Posted - Thursday, August 15, 2013 - Munawar Hasan - From Print Edition - The News
LAHORE:
Pakistan could save as much as $1.5 billion by immediately initiating
already delayed imports of Liquefied Natural Gas (LNG) to meet the
country’s power shortfall, the News learnt on Wednesday.
According
to a conservative estimate, this would also lower the average cost of
generation by Rs 2.50-3.50 per unit if diesel and furnace oil run
thermal plants are fueled with LNG/local gas in next five years.
The
move will lead to reduction of oil imports, as well as resolve power
and gas shortages and the production of unaffordable energy in a phased
manner, said sources.
So far though the move has suffered
long drawn out delays at the hand of newly elected regime, putting
recently announced power sector reforms at stake, the sources said
Nothing has come out of it so far but this time the stakes are very high this time due to multiple factors, sources said.
They
added the federal government will have to take proactive measures to
remove bottlenecks in initiating LNG imports. Unlike most of other
countries in the world, Pakistan has been blessed by seaports that are
connected with an all-encompassing gas pipeline network. They further
said that we should primarily consolidate on this strength and kick
start energy augmentation plan accordingly.
Initially,
the import of LNG in low quantities for six-to-eight-months can mitigate
power shortage by 15-20 per cent and plug deficit of natural gas by
5-10 per cent.
In the medium-term, LNG import can resolve
the ongoing power crisis by about fifty percent besides improving
supplies of natural gas by up to 30 per cent for cooking, heating and
industrial purposes.
Presently, the depleting gas supplies could only be stabilized by importing LNG.
Alternative
options of thermal power generation by furnace oil & diesel are too
costly and could be replaced by LNG without investing a penny.
Immediate LNG import is a fairly simple remedy for a complicated and messy energy sector, the sources said.
Conversion of existing thermal plants to coal would take approximately two years and hence is not an immediate solution.
Under
the national power policy 2013, the government has retired circular
debt in less than just two months in power. Electricity tariff is being
increased to maximum levels in a bid to avoid payments of subsidy and
subsequent accumulation of circular debt in future.
However,
these steps are not a permanent solution. Policy makers will have to
jumpstart generation of cheap electricity simultaneously to reduce
average power tariff as costly electricity will not be bearable for
extended periods.
Pakistan needs to enhance the share of
LNG in its energy mix to 30 per cent from present zero per cent in next
five years in order to address challenges of quantity and quality, the
sources observed.
LNG should be used for meeting the peak load demand and much of the base load of about 6,000 MW of electricity.
These
plants utilizing it are located closer to load centers. Losses will be
minimal and there will be no cost of setting up infrastructure or
transporting fuel/coal.
The start should be a 2-5- year
take or pay agreement for terminal facilities could be struck with EVTL
and SSGC, the sources said.
For example, the EVTL deal
will lead to utilization of its existing terminal infrastructure for
around six months to supply 500 mmcfd for a week, twice a month or on
the average 200 mmcfd. This is enough for cheap generation of 500mw of
power.
Local LNG import structure capacity could be
increased in stages to 750-2,000 mmcfd depending on conversion of
thermal plants to gas by incorporating other players, sources said.
These
arrangements will also help meeting CNG requirement of 3,000 CNG
fueling stations and over two million CNG-powered vehicles in the
country.
In the next 10 years, production of natural gas
is expected to fall by 30 percent while demand is expected to rise by 70
percent reaching 8.5 billion cubic feet per day.
Fertilizer
and petrochemical industries are also completely dependent on natural
gas with no alternate in sight. In order to overcome all these supply
side constraints, LNG import is one of the most viable and
ready-to-implement options, sources concluded.
Post to be found at:
http://www.thenews.com.pk/Todays-News-3-195889-Delayed-LNG-import-could-save-$1.5-billion
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