Home South Asia Pakistan With rising gas prices, all eyes on TAPI

With rising gas prices, all eyes on TAPI

Without a doubt, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is one of the biggest energy projects in the region, especially, in line with Pakistan’s vast domestic and commercial consumption of natural gas and a recent summary of a regulatory body recommending 47% hike in gas price. TAPI gas pipeline project is expected to be completed by 2022 in Pakistan, and once completed; Pakistan is expected to receive 1.320 billion cubic meters (bcm) of natural gas.

gas prices

News Desk |

Households and business have long been suffering because of energy shortage and, perhaps, that is the reason why gas and electricity supply are added as a vital part of the political parties’ election manifestoes.

Without a doubt, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is one of the biggest energy projects in the region, especially, in line with Pakistan’s vast domestic and commercial consumption of natural gas and a recent summary of a regulatory body recommending 47 percent hike in gas price.

In the recent past, Pakistan’s textile sector immensely suffered because of the energy crisis and, as a result of it, the textile industry shifted to Bangladesh because of the gas and electricity shortage.

TAPI gas pipeline project aims to bring natural gas from the Gylkynish and adjacent gas fields in Turkmenistan to Afghanistan, Pakistan and India.

To address the increasing demand for gas supply, a delegation led by Special Assistant to Prime Minister Imran Khan on Petroleum Nadeem Babar departed for Ashgabat, Turkmenistan, on Sunday to participate in the TAPI gas pipeline meeting.

It is expected that the groundbreaking of the TAPI gas pipeline will be held in Pakistan in October and the Pakistani delegation would finalize the plans for the groundbreaking of the project during the visit. Once operational, it is hoped that Pakistan’s domestic and commercial crisis related to gas supply would be resolved.

Why TAPI Important for Pakistan? 

TAPI gas pipeline project aims to bring natural gas from the Gylkynish and adjacent gas fields in Turkmenistan to Afghanistan, Pakistan and India. The Asian Development Bank (ADB) is acting as the facilitator and coordinator for the project.

Read more: TAPI: A Dreamer’s Pipe-dream becoming reality?

The feasibility study proposes to lay a 56-inch diameter 1,680-kilometer pipeline with design capacity of 3.2 billion cubic feet of natural gas per annum (Bcfd) from ex-Soviet Turkmenistan through Afghanistan and Pakistan up to Pak-India border.

According to media reports, TAPI gas pipeline project is expected to be completed by 2022 in Pakistan, and once completed; Pakistan is expected to receive 1.320 billion cubic meters (bcm) of natural gas.

The TAPI project has been touted by Turkmenistan since the 1990s but the start of work was delayed because of the problem of crossing Afghanistan. Turkmenistan holds the world’s fourth-largest natural gas reserves but has heavily been dependent on gas exports to China after Russia cut back gas imports in the past few years.

The regulatory body has sent a summary to the government in this regard on Friday – the day when the rupee hit a new all-time low of 149.35 to greenback in the inter-bank market.

Keeping in view the gas supply from TAPI, it is expected that the issue of the frequent surge in the gas prices in Pakistan would be overcome.

North-South Gas Pipeline Project (NSGP)

TAPI’s official website states that the existing gas infrastructure of Pakistan lacks the capacity to transport an additional large volume of gas supplies from Southern to Northern regions of the country.

Therefore, keeping in view the expected additional gas supplies in the near future, Ministry of Petroleum and Natural Resources has planned to undertake the laying of gas pipeline from Karachi to Lahore under the title “North-South Gas Pipeline Project”.

Read more: Pakistan’s gas sector attracting huge foreign, local investment

In its meeting held on 10th January 2015, the Economic Coordination Committee has approved the NSGP. The 1,122 kilometers long and 42-inch diameter of pipeline with the design flow of 1.2 (bcfd) will be implemented on Build Own Operate and Transfer (BOOT) model with Russia under government-to-government arrangement.

Ogra Recommends 47% Rise in Gas Prices

On May 17, the Oil and Gas Regulatory Authority (OGRA) requested the government to increase the prices of gas by 47 percent for the fiscal year 2019-2020. Due to the depreciation of rupee against the dollar, the gas prices in Punjab and Khyber-Pakhtunkhwa may further increase by 47 percent, while in Sindh and Balochistan by 28 percent from July 1, 2019.

The regulatory body has sent a summary to the government in this regard on Friday – the day when the rupee hit a new all-time low of 149.35 to greenback in the inter-bank market. The government has already agreed to the International Monetary Fund (IMF)’s demand of increasing prices of gas and electricity for a US$6 billion bailout package.

The previous increase in the gas rates had partly shifted the burden from residential consumers to commercial, industrial, power, fertilizer, cement, and CNG sectors.

In the latest summary, Ogra has requested the government to jack up rates for domestic consumers with effect from July 1 to keep the gas companies afloat.

PTI Blamed PML-N for 143 Percent Increase in Gas Tariff in Sept 2018

In September 2018, it was reported, the Pakistan Tehreek-e-Insaf (PTI) government had approved up to 143 percent increase in natural gas tariff during the ongoing fiscal year having a cumulative financial impact of about Rs116 billion.

The previous increase in the gas rates had partly shifted the burden from residential consumers to commercial, industrial, power, fertilizer, cement, and CNG sectors. The then finance minister Asad Umar had presided over the meeting of the Economic Coordination Committee (ECC) of the cabinet which had approved the new rates.

Read more: Ogra recommends 47% rise in gas prices – fulfilling an IMF…

The then minister for petroleum Ghulam Sarwar Khan had blamed the Pakistan Muslim League Nawaz (PML-N) government saying the two gas companies — SSGC and SNGPL — were operating in profit when PML-N assumed power in 2013, but it left behind a deficit of Rs152bn after five years. He had said that it was a difficult decision for the new government in view of higher gas purchase price which could not be sold cheaper.