ISLAMABAD: The Iran-Pakistan gas pipeline will bring an economic disaster in the country as the gas imported from Iran would be more expensive. Therefore, the government should negotiate the gas rate and delink it from oil prices.
These were the findings of a report titled ‘Rethinking Pakistan’s Energy Equation: Iran-Pakistan Gas Pipeline’ launched by the Sustainable Development Policy Institute (SDPI) yesterday.
Presenting the report, Energy Adviser SDPI Engineer Arshad H Abbasi said gas and oil were different commodities and Pakistan needed to re-negotiate the gas price with Iran.
“We have an agreement with Iran that we will buy gas for $15/MMBTU. However, Turkmenistan is supplying gas to Japan at a rate of $4/MMBTU,” he said.
The energy adviser said Pakistan needed $8bn to lay the pipeline from Nawabshah to the Iranian border which was not affordable.
Therefore, the government should give preference to the construction of dams as hydroelectricity is the cheapest source of energy, he said.
“By paying a high price, Pakistan will generate electricity for Rs15 per unit. However, the government should not forget that Independent Power Producers (IPPs) installed in Pakistan are not very efficient so the cost of per unit electricity could further increase,” he said. Abbasi said when the agreement was signed with Iran in 2004, Pakistan had linked the gas rate with the price of oil. However, as oil prices had increased in the international market, the gas imported by Pakistan would also be more expensive.
“Italy and Germany took their cases to the International Court of Arbitration for delinking oil and gas prices regarding their gas deal. Pakistan can also negotiate the gas price with Iran under Clause 6.3 of the agreement,” he said.
He said that Pakistan had a combined power generation capacity of 24,000MW which it was unable to meet due to the scarcity of natural gas. It had failed to discover new gas reserves and was forced to import the fuel to meet its growing energy requirements, he added.
“Consistent policy failure in the energy sector has led to the present high costs of electricity. We should construct more dams because they provide water for agriculture and save the country from floods.
“Egypt managed to survive a seven-year-long drought with the help of a proper water storage system, the Aswan Dam,” he said.
Former ambassador Shafqat Kakakhel said there was a dire need for improving the transmission and distribution system in the country, developing clean sources of energy, controlling indiscriminate spread of gas connections and maintaining smart metres.
He said Pakistan had already witnessed a ‘capital flight’ due to the energy crisis as several textile units had shifted to Bangladesh which had led to massive unemployment here.