Imran Khan Talks about Gas and Electricity Issues

[yazdi]

Re: Imran Khan Talks about Gas and Electricity Issues

@Amal

There are plenty of 'em who do not know what they are talking about.

Since he was talking about gas shortage, it was only pertinent to mention the role of OGDC which is the prime organistion for the development of gas resources. Development of resources is directly linked with supply and demand mechanism. And when you talk about collapse of supply and demand mechanism due to mindless usage of CNG, OGDC’s inability to come up with more resources was a relevant subject. Yusuf Raza Gilani appointed a matric-pass, NAB-convicted man to lead the firm - the mention was meant to show the vision with which the country is being run. It was generalization of government ethics.

OGDC is a commercial organization. With the present well head prices for gas no commercial organization will invest aggressively to develop new gas resources.. it’s has to make economic sense. We are so keen to import gas from Iran at exorbitant prices. If we give a fair price to local companies for the gas, I can bet we will have enough gas resources in Pakistan developed from local reservoirs. At present well head prices there will be no new exploration.. whether it is under Zardari or Imran Khan.. doesn’t matter..!!!

55% of private transporation is based on motorbikes - a segment that comes from the middle and lower middle class and does not use gas. To discourage the 45% well-off segment which owns automobiles to use CNG, we are making gas expensive for every kitchen in the country. 14% increase for domestic users simply does not make any sense.

Do you know why gas has become such a prized commodity in the country.. It’s simply because it’s very cheap. Compared to other energy sources gas costs a fraction at prevailing prices. If Khan sahib had a slightest idea about the gas crisis and it’s causes he would not have opposed the price increase in gas prices.

People who are trying to become champions of poor people forget that increase in diesel prices effect the poor people much more than the increase in gas prices. Gas subsidies are just helping very rich large scale businesses to multiply their profits. It’s killing the medium/small scale industries who have to pay much higher in energy cost than the large scale industries. The major source of energy for medium/small scale industry is Wapda supplied electricity.. which is being supplied to them at Rs. 12 per unit which is subjected to average 8 hour load shedding. Which means they have to generate electricity for 8 hours on stand by diesel generators which costs around 28 rupees. The average energy cost for small medium scale industry is about 18/20 rupees per unit.. while large scale industry with captive power plants is getting electricity at Rs. 4.5 per unit.. Where is the level playing field. ( We are killing our small/medium scale industry with this disparity)..

Furthermore.. diesel is used in all your public transport and goods transport (which have direct impact on prices of every consumable item).. It’s used to transport your agriculture produce from farm to market. Farmers run their tractors/equipment on diesel. Farmers run their tube wells on diesel engines.. We have increased the price of diesel by many folds in the past few years.. while gas prices have remained the same.

Domestic consumers are not even 10% of the total gas consumption. 27% is used by IPPs.. Another 27% is used by industry who are mostly using gas to produce electricity in the captive power plants. 18% is being used by fertilizer industry.. and another 17 percent is used by CNG sector.

Captive powe/fertilizer industry who are getting cheap gas are the biggest culprits in this gas crisis. Both these sectors are heavily subsidized for gas prices and they are making windfall profits at the expense of the nation. We should increase the gas supply to IPPs who are running at 50% capacity.. finish the Wapda load shedding.. supply big and small industry through Wapda (which is essential also to give level playing field).. and totally put a ban on captive power plants..

All these matters require a deep understanding of our economy.. and Khan sahib with this statement has shown his lack of understanding to the actual issue..

You have criticized the CNG sector so fiercely for all the gas crisis. Do you know with present increase in gas surcharge of 60% on CNG stations, this sector pays the highest price for gas. Fertilizer pays 1/6 the rate for CNG sector. CNG and Fertilizer sector both use around 17% of the total gas available. CNG is used in public transport as well as rickshaws/taxis etc. It is being used by 4 million vehicle owners in Pakistan, 90 percent of them use very small cars. They have opted for CNG because it’s much cheaper than petrol or diesel. True CNG should become more expensive for these vehicle owners.. bringing down the gap between petrol/diesel and gas.. but government is already doing it by recent increase of 60% surcharge. This can be done step by step.

The recent increase for fertilizer factories in rate was only 14% of 1/6 the rate they pay compared to other users. I have posted profit figures for some of the fertilizer units in another other thread mainly because of gas subsidy. Means the unit price increase for gas for fertilizer was not even 5% compared to CNG.

CNG/domestic users are not the main culprits..