Piped Gas still a dream for 75% of Pakistan’s population

Traditional fuels like firewood, dung and crop residues currently contribute a major share in meeting the everyday energy requirements of rural and low-income urban households in Pakistan. According to World Energy Outlook 2014, 62% of the population (112 million people) continues to rely on use of biomass.

Access to gas network in Pakistan has seen a staggered growth as 70 years after independence only 25% of the households in the country have piped gas. Due to demand-supply gap (demand for natural gas is 6bcfd while its supply is 4 bcfd), even households who are connected to the gas network experience chronic gas shortages, particularly in winters.

Moreover, due to the high capital cost of laying gas pipelines in the mountainous terrain, both AJK and Gilgit-Baltistan do not yet have a piped gas network and have to rely on either expensive LPG cylinders (transported from down-country) or burning of firewood for fulfilling their heating and cooking requirements.

This poses not only health hazards for the residents but also environmental problems in the region. The direct effect of collection of firewood and construction timber without forest management or adequate re-plantation has caused the tree cover in the mountain areas to completely disappear resulting in soil erosion and climate change.

The figure below maps access to piped gas network across the country

Screen Shot 2017-07-12 at 9.58.28 PM

Source: SE4All Pakistan National Action Plan Working Paper

Extension of Piped Gas Network

In its latest determination, SNGPL has been mandated adding 250,000 new domestic connections annually while domestic connections sanctioned by SSGCL has increased by an average of 60,000 annually over the last few years. The criterion for sanctioning gas connection varies, from one region to another, based on the population density, geography and the socio-political context.

In Punjab, a new housing scheme will be given gas connection if the cost of providing the connection is less than Rs. 54,000 per customer. On the other hand, in KP and Sindh the cost threshold is Rs. 108,000 while in Balochistan it’s Rs. 200,000. Even with these differences in cost, it will not be financially or economically viable to extent piped gas network to several remote locations in each of these provinces.

As per the government’s plan, connections are going to increase gradually. Assuming population growth rate of 2% and a 5% annual increase in connections, the total domestic connections are going to increase to 9.75 million by 2020, 12.38 million in 2025 and 15.81 million by 2030.

Installation of LPG Air Mix Plants

GOP will be installing 60 LPG Air Mix plants in areas un served by piped network, out of which 28 will be in Balochistan, 2 in Sindh and the remaining 30 will be set up in Punjab, KPK, AJK and Gilgit-Baltistan. Size of these plants is going to be between 0.5 and 1 mmcfd. Assuming an average size of 0.75 mmcfd, one LPG air mix plant will serve gas to 7,500 households. 60 such plants will serve 450,000 households by 2019.

Thus, by the end of 2030, only 45% of the households will have access to gas. Over 50% will still continue to rely on biomass for cooking and heating.

Barriers to Achieving Universal Energy Access 

For Pakistan to achieve universal access to modern fuel, it will have to address the following gaps:

  • Rationalizing subsidy provided to domestic consumers of gas in order to disincentivize its wasteful consumption.
  • Unaccounted For Gas (UFG) losses in gas network of SSGC and SNGPL stands at about 15% and 11.5% respectively whereas the permissible limit by OGRA is only 4.5%. This is reported to be one of highest UFG losses in the region translating into the monetary loss of Rs. 50 billion.
  • SNGPL and SSGCL are allowed 17.5 per cent and 17 per cent guaranteed rate of return on assets respectively. This does not provide any practical incentive to the gas companies to be efficient.
  • Inadequate policy, strategy and regulations related with biomass use to ensure the sustainable use of biomass.
  • Presently, no institution is playing a leadership role in support of coordination and of sustainability of efforts. While the GOP is supporting the LPG market, mainly by regulating its price, NGOs and CSOs have focused on alternative fuels like biogas but with no mechanisms to ensure the quality of equipment and manufacturing in the long run.
  • Unavailability of sufficient information and data mapping usage of biomass and fuel wood across the country makes policy formulation and design of necessary interventions a challenge.
  • Majority consumers of firewood do not pay the true cost of using the resource. Market prices of charcoal and firewood only reflect the opportunity cost of harvesting, transformation and transport and do not reflect the costs of producing firewood. In addition, most consumers in provinces such as Sindh and Punjab where firewood is in abundance use the resource at no cost other than the time required for collecting the fuel wood.
  • Limited LPG use  in rural areas due to:
    • Lack of a distribution network or filling centers
    • Inadequate awareness regarding the health, economic and technology benefits of using LPG for cooking
    • The high upfront investment cost for households for purchasing the cylinder, cooker and gas.

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s