The government is exploring the idea of implementing a price equalization levy on wellhead gas to assist residential consumers and important industrial sectors.
According to media reports, this project’s goal is to lessen the yearly financial support pressure on the national budget by Rs 10-15 billion. This proposal is a component of wider reforms within the Integrated Energy Plan, spearheaded by the Prime Minister’s Office in partnership with global financial institutions.
The objective is to transition Pakistan’s gas companies from struggling to self-sustaining and profitable entities, leading to their eventual privatisation. The decision is made as Pakistan confronts increasing energy difficulties, as the population is projected to exceed 250 million by 2050.
At present, Pakistan has one of the lowest per capita energy consumption rates in the region, standing at 0.33 tonnes of oil equivalent (TOE), in comparison to Sri Lanka’s 0.39 TOE and India’s 0.65 TOE.
Experts anticipate that Pakistan’s energy requirements might almost double by 2045 if its economy sustains a 3.5% annual growth rate.
At present, the majority of Pakistan’s energy requirements, about 82%, are fulfilled by using fossil fuels, with a large portion being brought in from other countries, leading to a heavy burden on the nation’s foreign currency reserves. More than 30% of Pakistan’s total import bill is now made up of energy imports.
Additionally, there is an expectation for a significant decrease in domestic gas production, dropping from 3 billion cubic feet per day (bcfd) to approximately 1 bcfd by the year 2035. In the meantime, it is anticipated that the overall gas consumption will increase from 5 bcfd to 6.2 bcfd.
In order to tackle these issues, the Petroleum Division has already brought on board, or is currently in the process of bringing on board, approximately twelve local and international consulting companies.
These companies will offer guidance in technical, financial, and strategic aspects to assist in restructuring the gas industry. Furthermore, the Petroleum Division is welcoming new senior executives with specific skills to join its technical departments.
Dr. Musadik Malik, the Petroleum Minister, has been assigned to manage the creation of a “blended revenue requirement” for gas that merges the expenses of wellhead gas, pipeline gas, and imported LNG to establish a more durable pricing structure.
The government plans to recruit technical analysts and consultants by August 16 to help with this process. The goal is to establish a wholesale gas market through the segregation of pipeline activities and distribution firms. This method has the ability to draw in foreign investment, particularly from companies in the Middle East, if handled with expertise.
Apart from these reforms, the government is also giving attention to offshore exploration. Negotiations with the Chinese government are going smoothly, and there is a chance that offshore exploration blocks could be granted to Chinese state-owned companies such as CNOOC (China National Offshore Oil Corporation).
There are 24 offshore blocks selected for a future auction round, with assistance from companies such as Wood Mackenzie and LMKR to promote them.
In order to make operations more efficient, the government is revamping the nation’s explosives control system by integrating it with a track-and-trace system (TTS) that is set to be up and running by September 15. Using GPS, biometric data, and barcodes will improve the integrity of the supply chain system.
These changes are a component of a larger plan to update Pakistan’s energy industry and lessen its reliance on imported fuels, all while encouraging investments and enhancing efficiency in all areas.
