Dealing with gas crisis: options and choices

 ISLAMABAD:

Domestic gas production has finally started coming down in a significant way. There are slim chances that in the short term, it may go up, although some improvement may be possible in the medium to long term.

Imported gas, either in the form of liquefied natural gas (LNG) or piped gas, may take two years. And there are transmission issues as well. New infrastructure in this respect will take two to three years to implement.

Thus, consumers are in for gas shortage for the next two to three years. What are the options for consumers and how the government can facilitate those options is our subject in this space.

Rich (including the higher middle class) have potentially many choices. Ironically, the rural poor are not affected by the gas crisis, as they are not the users or beneficiaries of piped gas. Only 20% or so of the households in Pakistan have access to piped gas as against electricity for 80%. There may be questions in the numbers for electricity, though.

Poor rely on biomass, tree shrubs or cow dung and will continue to do so. Rural rich are installing solar and other technologies. It is the urban poor and the lower middle class, who have a problem.

Neither could it be said that who cares for the poor? Pakistan’s energy tariff (both electricity and gas) is highly considerate for the low-income groups. In case of gas, even variable costs are not covered and in case of electricity, only variable costs are covered hardly. And energy theft is also tolerated, either by design or by default.

Although some gradual tariff adjustments are needed to correct this, the International Monetary Fund (IMF) wants us to do away with it, like their other fancy ideas. They want to institute a direct subsidy system for the poor.

Ironically, the concessional tariff disables the adoption of new options and technologies. Solar PV, for example, is not attractive for small consumers enjoying concessional tariff of around Rs5 per unit or slightly higher. On the other hand, solar PV is very attractive for large residential consumers having electricity tariff of around Rs25 per unit.

Gas demand increases in winters due to heating and international LNG prices also increase in this period and even go higher than the proverbially expensive Qatar LNG prices. This makes both, gas and electricity, expensive in winters.

However, electricity demand is lesser in Pakistan in winters, largely due to gas-based consumer preference. Cooking in Pakistan is almost 100% dominated by gas, either liquefied petroleum gas (LPG) or natural gas, contrary to the global trend. Although LPG is the next option but it is many times more expensive, especially, if the poor man’s concessional tariff is considered. For higher residential tariff, it is twice as expensive.

LPG may also become short when most people shift to LPG when ordinary piped gas is not available. When there is shortage, prices go high usually. LPG is the fuel for the rich or at best the middle class.

Electric cooking

For cooking, at least rich has the option of switching to electricity, at least partially. Electric induction cookers single burner is available at a price of Rs7-10,000 per seat/ burner (although seat and burner are wrong choices of the terms).

Salan can be cooked easily and even faster on the induction cooker. It is also more energy efficient.

In case of gas stoves, most heat is lost due to radiation. Microwaves and electric kettles are also options for meal heating and tea making which are already widely used.

Induction cookers emerge as a new option. For chapatti, there are electrical chapatti makers also. Those who have installed solar PV of 5KW, again the rich class, are in an enviable position of having much cheaper electricity.

The government may consider options for introducing an innovative electric tariff for diversion to electricity in winters, when electricity demand is low and the government has to pay fixed capacity charges for the under-utilised capacity. Some of this cost can be recouped through incentive measures.

Water heating for bathing is the most interesting area where considerable and interesting alternatives are there. In winters, gas is consumed the most for space heaters and water geysers which are awfully energy guzzlers.

For space heating, electrical inverter ACs are the best option and a boon for solar PV consumers. No new investment is required. Most people require or use ACs for summer cooling any way.

Solar geysers

These are the best option for water heating. An average size 200-litre geyser costs Rs45,000 per unit and a larger 300-litre one may cost 50% higher. Unfortunately, it is not as popular as it should have been, especially, when one compares to relatively faster pickup of solar PV installations on the rooftop.

Solar geysers are provided with an electrical option as well for rainy days. Those who have installed solar PV can divert extra capacity to solar geysers. This is an option that is emerging fast in replacing net metering.

Excess solar PV output can also be diverted to pure electrical heaters as well by installing timers or mobile-based switches.

Technically, heat pumps, something similar to air-conditioning systems, are the most energy efficient and probably the cheapest in the long run. Its market and supply chain is emerging with upward cost being over Rs2 lakh and it is not generally available in the local market.

Solar geysers are the next best option as has been indicated in the foregoing. Solar geysers are very popular in China, Turkey, Greece, India and even in the US.

In Pakistan, people are still reluctant and have little awareness of solar geysers. There are supply chain issues as well. Solar geysers’ storage cylinders have low quality and life than those available elsewhere. Typical life of a solar geyser exceeds 10 years but in Pakistan storage cylinders corrode away due to quality and maintenance issues. Currently, almost all solar geysers available in the market are imported from China.

There are more than 1,000 manufacturers in China of this product including a large number of very small enterprises which compete in prices and quality.

The government can do a lot in this respect - gas companies, Alternative Energy Development Board (AEDB), National Energy Efficiency and Conservation Authority (NEECA) and Pakistan Council of Renewable Energy Technologies (PCRET)? Almost all of these have done something with respect to facilitation of one form or the other.

The Engineering Development Board may have to come forward as well. However, they need to put their act together. Perhaps, a working group for policy development may be required.

Except for glass tubes, all other items namely storage cylinders and the structure are simple steel fabrications which can be manufactured locally. Without local manufacturing, the market, competition and quality are not established.

Some kind of subsidy in the form of credit and leasing may be considered as well. It is said that it is difficult to compete with poor quality Chinese products which are not necessarily true. Neither is Chinese quality poor in all cases nor is the cost competition difficult.

Chinese companies may be encouraged to enter into local joint ventures. It may require a policy as has been developed for mobile phone manufacturing. It would be highly unfortunate if such low technology and bulky items as solar geysers continue to be imported.

Transport cost differential should be enough for price support. There are many engineering goods in Pakistan which are competing effectively or have the potential to do so. What will we be producing in Pakistan to increase exports, bring down imports and control circular debt?

The writer is former member energy of the Planning Commission