fueling the future - Woodrow Wilson International Center for Scholars

Shahid Javed Burkiconsumption of gas increased since the government encouraged its usein power generation as well as fuel for transport. As suggested by theserates of increases in demand, coal has become important, and in 2003-04 accounted for 6.5 percent of total energy supply. 2 Pakistan had begunto focus on the use of coal, as people realized that coal was a major domesticsource of energy.The government was also promoting the use of compressed naturalgas (CNG) in vehicles to reduce urban pollution. By March 2005,about 700,000 vehicles were converted to CNG, up from 450,000 inMarch 2004. This rate of conversion is likely to continue in line with thealarming increase in urban pollution. Some of Pakistan’s major urbancenters—including Lahore, the country’s second largest city and thecapital of the booming province of Punjab, the largest province of thecountry—are counted among the most polluted cities of Asia. But therewas hope that the rapid conversion of vehicles to CNG would arrest thistrend. According to a government report, “with these developments,Pakistan has become the leading country in Asia and the third largestuser of CNG in the world after Argentina and Brazil.” 3The “weight of history,” as discussed in the section that follows, hascreated a number of distortions in the sector. Of these, at least three areworth noting. First, the share of household consumption is much higher inPakistan than in other countries at the same stage of development. For electricpower, domestic consumption in 2005-06 was estimated at 7,199 MW,46 percent of total supply (see Table 2). In rapidly developing countriessuch as those of East Asia in the 1970s and 1980s, the figure was around20 percent. Industry, with 38 percent consumption of total supply, was thesecond most important sector, while agriculture, with 11.4 percent, was inthird place. Commerce claimed 7.8 percent of the total. The structure ofdemand was the consequence of the pricing policy and institutional developmentpolicies followed for decades. For instance, electric power tariffsencouraged the use of air conditioning in residences. Air conditioning penetratedPakistan much more deeply than India. On the institutional side,the setting up of two gas distribution companies—the Sui Northern GasCompany and the Sui Southern Gas Company—led to the development ofa vast network of gas pipelines that covered most of the country. 4 Within aperiod of 25 years—1960 to 1985—Pakistan was able to construct one ofthe largest gas pipeline networks in the developing world.| 38 |