No Gas in the Pipeline: Pakistan’s Energy Crisis

By Zoon Ahmad Khan
Research Analyst
Spearhead Research

With an electricity shortage of 4000MW per day, by 2007 the Pakistani Government could no longer deny to itself, or to the people, that the country was suffering from yet another crisis: the ‘Energy Crisis’. The Energy Deficit that continues to grow today has proven to be a major blow to the already fragile social and economic fabric of the State of Pakistan. The industry that could have been flourishing, fails to compete with the cut-throat Global Standards in terms of efficiency. With investors withdrawing their investments Pakistan has in fact been trapped in a rather vicious cycle: Economic failure that causes unemployment and Social turmoil which in turn destabilize the transition to democracy and encourage extremism, the product of a frustrated society, resulting in bloodshed and terrorism. As the problems we face are highlighted in news and become apparent in the form of a deteriorating lifestyle and high rates of unemployment, a lack of faith in the democratic system’s ability to function prevails.

With the economy experiencing a major slump and an increased unease among the masses, the growing levels of dissatisfaction with the democratically elected Government over the Energy and Gas Shortages and the failure of the state to take effective steps to sort out the matter has already had serious consequences. The decade post 9/11 has brought not only external influence, drone attacks, religious extremism, terrorism, but also natural disasters our way. The Earthquake of 2007, Floods of 2010 and 2011, and the Dengue Virus have affected millions and left the Pakistani Government on rather thin ice. It would be reasonable to state that Pakistan is in a crisis situation and the Energy Crisis is one that has acted like fuel to the fire of disorder.

The Iran Gas Pipeline Project, one of Pakistan’s more promising options, was originally conceived in mid 1990s as a peace pipeline that would connect Pakistan and India to Iran’s biggest gas fields in South Pars. Security considerations and failure to arrive at an understanding with Pakistan over transmission charges saw India hesitate time and again over joining the project. In 2009, Pakistan decided to go ahead with the Iran Peace Pipeline Project without India, and in June 2010 the deal was finalized in Tehran and representatives from both countries signed the agreement to export 20 million cubic meters of natural gas per day from 2014.

However this solution has its own problems, the first being interference by the United States. India finally withdrew from the gas pipeline after signing a nuclear deal with the Obama administration and the US government is pressurizing Pakistan to look into alternative power sources that the United States can help Pakistan with. Sanctions on Iran have also been of major concern as they could hamper Iran’s own ability to export gas.

“In theory, it’s feasible to do. But with politics it’s hard to tell,” said Manouchehr Takin, Senior upstream analyst of the Centre for Global Energy Studies. “Iran has had difficulty buying and paying in international markets. The US has gone out of its way to twist the arms of oil companies.”

And this is the harsh reality that Pakistan has to face today. The contract and feasibility report are all very promising. Moreover given the current Energy Crisis, this stands out as the only option for the state of Pakistan even if helping Pakistani brethren and standing by an ally who hasn’t gone hot and cold like the US, and the vicious cycle that Pakistan has caught itself in for the past decade, add up to compelling evidence that scream out ‘Iran Gas Pipeline’. Moreover the failure to execute the Kalabagh Dam Project has had serious consequences. The floods that have left millions homeless in Sindh and lower Punjab could have been less severe if not prevented altogether had it been for the dam. Whether the reservations expressed by Khyber Pakhtunkhwa and Sindh were legitimate and whether or not Pakistan would have been better off with the dam; the media, the Establishment and the masses can never know for sure. The Dam is no longer our finest option to resolve the energy crisis because the Iran Gas pipeline is guaranteeing energy supply from 2014, whereas the Kalabagh Dam can never be debated over enough.

The US pressure has increased and Washington’s intervention has become less subtle as the Gas Pipeline Project and its execution become more real a prospect. Islamabad has been under intense pressure to break the deal, and simultaneously was refused every time an attempt was made to secure a nuclear deal with US on the same pattern as was concluded with India.

Despite US’s ‘warning’ against the Pipeline Deal, Pakistan has taken a bold stance about this matter. Foreign Minister Qureshi made it very clear that Pakistan has suffered a lot because of the war, the damage done is not only of property and life but even the psychological costs of a decade long war have left the Pakistani Society in a vulnerable position. The insecurity that prevails in the Pakistani mind will remain if we keep witnessing and experiencing crisis after crisis. The social upheaval, target killings, terrorist attacks and ethnic and political based violence have left the Nation in a State of Confusion. As chaos prevails, the state needs to take bolder steps to restore stability. And yes, there is enough evidence to back the government’s claim that the ‘Energy Crisis’ needs to be resolved to counter terrorism. Given Pakistan’s volatile state at this point, any source of discrepancy could have drastic consequences and at the same time resolving these very basic problems can be the first step to resolve the bigger issues.

Due to soaring gas demands and power shortage, none of the half-hearted alternatives that Washington is willing to offer seem feasible. No agreement has been reached upon between the two parties to assist in the Diamer Basha Dam, the only other comparable project in the pipeline. Cameron Munter, US Ambassador to Pakistan continues to emphasize that Pakistan is in dire need of reforms in the Power and Energy Sector to attract financially viable investment. These recommendations encourage Pakistan to look for indigenous sources of Power rather than importing; however with no funds to finance a multi-billion dollar project; and no obvious solution to the social upheaval that scares away investors, the Iran Gas pipeline should be an immediate solution that can place us in a better bargaining position. The pipeline in other words should be treated as a stepping stone.

The people of Pakistan seem to have reached their threshold for tolerance. Immense sacrifices have been made by the masses, the army, and the state to accommodate the American Interests and become a valuable ally to counter terrorism worldwide. And despite all that this nation has offered, nothing seems to be enough. Our relationship with the United States continues to oscillate between two extremes. Internal matters have only worsened and today Karachi’s situation has left the nation shattered. All of this happened while we acted in the so called mutual interest of the US and Pakistan. And yet our problems are only becoming bigger and more complicated. In such a situation it is high time to act differently.

It is no secret that since the ‘War against Terrorism’ Pakistan has found itself in a state of anguish. The society and media question the Government’s tendency to unconditionally give in to the demands of our biggest ally, the United States. The decade post 9/11 and our participation in the war have directly or indirectly resulted in a state of chaos. The roots of our problems might not lie in our participation in the War; but the war has definitely aggravated the Ethnic, Social, Economic and Political Unrest that we have been experiencing for a while.

The Iran Gas Pipeline is a promising project and for the first time in decades Pakistan is looking at her own interests in isolation from those of US. It is a bold and courageous step on the part of the Establishment. Whether this solves terrorism, religious extremism, target killings and the Social and Economic downturn that we are experiencing, we can’t be sure. But the course of events in the past and our experience with the United States to date suggest that it is a calculated risk that Pakistan must take. Playing it safe has only proved self destructive and a bold move is necessary at this point.

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