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Higher gas prices

2016-10-11
IT has been known for a long time that the gas sector in Pakistan is in dire need of reform. Domestically produced natural gas accounts for almost half the country`s primary fuel requirements, and much of the incremental demand comes from households. There is no doubt that residential consumers should have priority access to gas allocations, but at the same time, it is important to understand that many of them tend to be extremely wasteful. Industry stakeholders have long argued that impractical wasteful practices stem from the low price of gas which leads people to believe that it is abundant and cheap, whereas in reality it is scarce. They have argued for a strong upward revision of prices by almost 500pc in order to get ordinary consumers to realise the importance of conservation when utilising this precious resource. People need to worry about the efficiency of gas appliances when making their purchase, just as they do when buying electrical appliances such as air conditioners and fridges.

So the 14pc hike in gas tariffs that has just been announced may be a step in the right direction, but it is important to supplement this with an awareness campaign that should let consumers understand that gas is a precious resource and its supply is dwindling. The recommendations of industry representatives may be too harsh for any government to own, but the dissemination of the message that gas is in scant supply and needs to be conserved presents no difficulties. Ultimately, Pakistan will turn more and more to imported gas to fulfil future requirements, and this will also need some amount of pricing reform to close the price gap between domestic and imported gas. Along the way, households across the country need to be made aware of the methods of conserving gas.

Households will continue to be the largest consumers of natural gas, and shortages are encouraging all manner of malign practices -instead of conservation measures such as resort to the use of illegal suction pumps and the use of gas generators that are run on domestic connections. Prices alone cannot be the medium through which to signal that a change in consumption practices is needed.

The cottage industry in gas appliances needs to be regulated, and awareness created. By itself, price reform will always generate political challenges, making it difficult to walk the road in earnest.