Experts say the energy sector has been stifled by government indecision

ISLAMABAD: Experts at a recent conference highlighted that government indecision on key policies and projects remains a major obstacle to the development of the power sector.

As Pakistan’s domestic gas reserves shrink, the liquefied petroleum gas (LPG) sector presents significant investment opportunities, with demand for LPG expected to more than double in the coming years. Experts, however, called on all stakeholders, including the government and regulators, to work together on a concrete strategy to combat various mafias hindering the promotion of the sector.

Ogra CEO Masroor Khan said the authorities are ensuring that all challenges are addressed and products are safely transported from south to north by regulating 30,000 shopping malls. He emphasized that there are 3,000 companies operating in the country. illegal gas stations and actions should be taken to eliminate such stations through cooperation with district and provincial authorities. Closing down these 3,000 illegal stations operating outside Ogra’s supervision was a difficult task.

Khan added that: “The only segment of the energy sector that is currently growing exponentially is LPG, which has huge investment potential from production and import to end consumers.” Currently, LPG has a 1.3% share in the country’s energy mix with a daily consumption of 5,000 metric tons. Its share is expected to increase to 7-8 percent in the next six to seven years, with daily consumption reaching 11,000 metric tons. Khan also highlighted the investment potential in port LPG storage facilities, especially in the Karachi port, as the country needs more storage facilities.

It is worth noting that the federal government, through the Special Investment Facilitation Board (SIFC), is working to increase LPG storage capacity and purchase larger LPG tanks. There are around 300 LPG bottling plants in Pakistan and as demand increases, this sector also offers investment opportunities. Additionally, the production of commercial 200 kg LPG cylinders and increasing the number of tanks on the road from 2,200 to 5,000 over the next six years creates further investment potential.

Regarding the compressed natural gas (CNG) industry, Khan noted that although the CNG industry is a dying industry, there are still 7-8 applications pending, which he found peculiar. He also mentioned that five licenses have been issued for the LNG terminal, of which two are operational and three are under consideration. Another three applications for virtual LNG terminals are being considered.

Attock Refinery Ltd Managing Director Adil Khattak has called for stricter measures to control oil smuggling from Iran, which is causing significant losses to the national exchequer. He cited an intelligence report showing that 7,400 tons of diesel fuel are smuggled per day, resulting in annual losses of $900 million. Khattak also noted the lack of new oil refineries in recent years and the need for significant capital investment to modernize existing refineries.

Khattak criticized the government’s indecision, pointing to the untapped potential of hydel power generation and long-term considerations on importing LNG and building gas pipelines. He asked why Pakistan cannot do business with Iran like the rest of the world, pointing to the influence of the mafia importing petroleum products.

Former Prime Minister/Petroleum Minister Shahid Khaqan Abbasi also addressed the conference and stressed the importance of timely decision-making. He linked the growth of the LPG sector to the rapid depletion of local gas resources and highlighted the enormous potential of the energy sector, which requires serious efforts to address the issues on priority.

According to Abbasi, “Despite awareness of the serious energy crisis, no timely decision was taken to address it.” He also pointed out that the government’s decision to deregulate the oil sector in 2018 had not been fully implemented. “The oil sector across the world has been deregulated, but in Pakistan it remains partially deregulated,” the former prime minister added.

Abbasi pointed to the lengthy three-year process of setting up a petrol pump in Pakistan and noted that the refinery policy has been pending for eight years. He also criticized the lack of timely decisions as an obstacle to the development of the sector.