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  • Writer's pictureSaleem Qamar Butt

Pakistan’s Energy Woes

Pakistan undergoes excruciating power shortages, causing 18-hour blackouts in rural areas and 6- to 10-hour load-shedding in cities. Although Pakistan has made unbearable investments in power generation and distribution through IPPs, in January 2023 the country suffered a breakdown in the national grid. Another blackout happened in October 2022. According to the World Bank, an unreliable supply of electricity is “a significant barrier to economic growth.” One recent study found that business profitability in developing countries may be reduced up to almost 40 percent by power crises.

On April 22, Iranian President Ebrahim Raisi visited Pakistan and a few days later, he died in a helicopter crash on 19th May 2024. During his visit, his likely top priority issue probably wasn’t Hamas or the Houthis, but rather a pipeline. The Iran-Pakistan natural gas pipeline (IPGP) was conceived in 1950. And in 2010, despite U.S. opposition the two countries concluded a 25-year Gas Sale and Purchase Agreement, and construction of the 2,775 km pipeline from Asaluyeh, Iran, to Multan, Pakistan. The initial cost estimate was $7.5 billion. In August 2023, Pakistan announced that it was suspending the project under threat of U.S. sanctions.

Iran precluded Pakistan’s attempts to get out of its agreement, but granted a 10-year extension, and both sides got to work on a way forward. The Iran-Pakistan natural gas pipeline was already behind schedule (Iran had completed its leg of the pipeline) and Pakistan was facing a heavy penalty at the time the Americans intervened. In February 2024, Pakistan approved the first phase of the pipeline, and in March 2024 announced it would ask the U.S. to relax sanctions so that the project could proceed. The U.S. promptly responded that “importing gas from Iran would expose Pakistan to U.S. sanctions.” As of now, Pakistan wants to avoid the $18 billion penalty, and Iran has set September 2024 as the deadline to finish the 780-kilometer Pakistan section of the pipeline.  

In order to present Pakistan with workable alternatives and keep IPGP project hanging by the thread, the hegemonic mover and shakers’ one alternative is the Central Asia-South Asia (CASA) power project, a $1.16 billion plan to export surplus hydroelectricity from poverty and instability stricken Central Asian states i.e. Kyrgyzstan and Tajikistan to unstable Afghanistan and Pakistan. The U.S. Agency for International Development expects a commercial start in 2024, but that remains uncertain if Afghanistan cannot build power pylons and other facilities. Another alternative potential energy source is the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline, and 1,100-mile, $10 billion project to ship 33 billion cubic meters of gas per year that has seen numerous delays since the pipeline consortium was announced in 2014. Construction started in early 2018 with a projected in-service date of 2021, but halted later that year after workers clearing the route were killed by unknown assailants. The project’s $10 billion cost estimate is now a decade old, and an update may cause further delay to the Asian Development Bank-funded effort. However, political instability and dwindling law and order situation in Afghanistan is prone to negatively impact this project too. Nevertheless, officials from Pakistan and Turkmenistan met in Islamabad in June 2023 and signed a Joint Implementation Plan, committing both sides to speeding up implementation.   

Some experts opine that Pakistan’s forfeiture of Iranian natural gas may benefit the U.S. from a trade perspective, as it may create a dependency in Pakistan on American liquefied natural gas, as in Europe after the sabotage of the Nord Stream pipeline and the cancellation of the East-Med gas pipeline. So what options Pakistan can exercise: one, Pakistan may eventually move away from gas and enhance domestic coal-fired power instead, further worsening air quality index. If Pakistan decides to adopt sustainable and green electricity generation, that will open the door for China, the world’s leader in renewable power and supplier of solar panels. The Americans disdain towards Iran in reckless pursuit of revenge for its 1979 embarrassment in Tehran will likely resurrect anti-Americanism; besides, further pushing Pakistan towards China.  

However, the greater American objective seems to be to frustrate the China-Pakistan Economic Corridor (CPEC), the $62 billion project to connect Kashgar, China, to Pakistan’s Gwadar port; which so far has remained the flagship project of Beijing’s Belt and Road Initiative, consisting of highways, railways and pipelines. The inability of CPEC to supply water, power and employment / business opportunities in Balochistan, exacerbated by deliberate covert 5th Generation warfare  in provinces of KPK and Balochistan, therefore will most likely remain prone to see increased violence by the sponsored terrorist outfits against Chinese nationals and companies operating in Pakistan. Nonetheless, the winner in all this will ultimately be China, Pakistan’s “all-weather friend.” China’s huge investments in Pakistan, its “lifeline” energy purchases from Iran, its endurance and pragmatism in Afghanistan, and its growing ties in Central Asia, where it has proposed a China-Central Asia cooperation mechanism and entered into Comprehensive Strategic Partnerships with former Soviet republics, shows it is “gathering in” countries with natural resources occupying strategic locations in Eurasia.  

The CASA region remains pivotal for economic and security interests of three big global powers in the overall pursuit of expanding and guarding respective spheres of influences and ensuring domination of the Global Commons especially in the Asia-Pacific expanse. However, all the three big powers got to keep in mind that CASA countries want to maintain equally good relations with them; therefore, prudence demands a peaceful manner of fair competition and cooperation rather than catapulting the region into a new World War Zone. The common prosperity sought through greater connectivity (BRI/ CPEC) as followed by China needs to be supported and emulated by Washington by avoiding such policies that hurt CASA states’ economies and jeopardize obligatory projects like IPGP. The world Bank, IMF and FATF's dealing with Pakistan through appointed Economic Hitmen should have made us realize that self sustaining energy projects from within and from near neighborhood are as good as " one in hand is better than two in the bush". 🇵🇰⚖️🤲

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