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Moment of hope
Publication Date : 13-03-2013
After long delays and many uncertainties, the Iran-Pakistan gas pipeline took a major step forward yesterday. For all its potential risks, and uncertainty about where the remaining US$1 billion of funding will come from, the inauguration by the two countries’ presidents of the construction of the Pakistan portion of the pipeline brings with it the promise - if Pakistan capitalises on it - of preventing even more damage to the economy from the country’s growing gas shortage.
Investment for domestic gas exploration and development has not been forthcoming. Other schemes to import gas have been stalled by mismanagement and possibly corruption. The existing supplies are so insufficient, and have been so badly managed, that they have severely impacted major industries, rendered consumers unable even to cook or keep warm, and driven up energy prices and the circular debt by increasing reliance on furnace oil for power generation.
There is the risk, of course, of ending up on the wrong side of American sanctions on doing business with Iran. But the United States-favoured Tapi pipeline through Central Asia and Afghanistan looks untenable given the security situation in the region, and Pakistan’s energy problems - together with their economic, political and security implications - are severe enough to warrant that exceptions to sanctions be made in this case. Pakistan should cooperate as far as possible by routing this business through Iranian companies and financial institutions that are not connected to that country’s nuclear programme. But beyond that, the US must recognise that Pakistan needs to balance its own economic needs with its responsibilities as an ally.
However, as Pakistan moves forward, one thing that must be kept in mind is that no amount of imported gas will be useful as long as the country doesn’t whip its energy and power infrastructure into shape. If they aren’t tackled, power-sector failures such as transmission losses, poor dues collection and insufficient diversification away from furnace oil for power generation will continue to hold the economy back. And the lack of a gas management plan that is actually followed and intelligently balances the needs of the residential, commercial, transport, industrial and power sectors will mean that we won’t be using the imported gas in the most efficient way possible.
Whichever new government comes into power should keep in mind that, as it formulates its energy and power policies, it has an obligation to make the best use of the gas from the IP pipeline.