Showing posts with label energy poverty. Show all posts
Showing posts with label energy poverty. Show all posts

Thursday, September 20, 2018

Rural Household Sector Energy Consumption Pakistan







Rural Household Sector Energy Consumption
Introduction
According to the World Energy Outlook (2016) statistics, at least 51 million people in Pakistan or representing 27% of the population live without access to electricity. According to IFC, the rate of energy for poor people is even higher with approximately 36% or 67 million out of 185 million without access to electricity. The National Electric Power Regulatory Authority, in its annual State of the Industry Report, concludes that approximately 20% of all villages, 32,889 out of 161,969, are not connected to the grid. Even those households that are statistically connected experience daily blackouts so that it is estimated that more than 144 million people across the country do not have reliable access to electricity. As a result, Pakistani households use a mix of technologies to power their homes and businesses. Household expenditures on energy for both rural and urban customers are presented as follows:
Household expenditure on Energy
2010
2011
Growth % 2010-11
Urban
Rural
Total
Urban
Rural
Total
Urban
Rural
Total
fuel & Lighting
7.06
8.01
7.6
6.89
8.74
7.91
-2.41
9.11
4.08
Household expenditure on Fuel and Lighting %
2010
2011
Growth % 2010-11
Urban
Rural
Total
Urban
Rural
Total
Urban
Rural
Total
Firewood
5.02
29.04
19.56
3.84
26.79
17.84
-23.51
-7.75
-8.79
Kerosene Oil
0.12
1.64
1.04
0.06
0.87
0.55
-50.00
-46.95
-47.12
Charcoal
0.00
0.01
0.01
0.00
0.02
0.01
Coal
0.01
0.05
0.04
0.02
0.09
0.06
100.00
80.00
50.00
Dung Cakes
0.88
7.84
5.09
0.50
7.63
4.85
-43.18
-2.68
-4.72
Gas Piped/cylinder
19.72
6.77
11.89
19.86
8.45
12.90
0.71
24.82
8.49
Electricity
70.95
41.41
53.07
71.69
41.43
53.48
1.04
0.05
0.77
Others
3.30
13.23
9.31
4.01
14.32
10.30
21.52
8.24
10.63

Household Energy
More than 50 % of the population, mainly in rural Pakistan, relies on traditional biomass for cooking. Common cooking fuels include firewood, agricultural waste and dung cakes. According to a study about Balochistan and Sindh region in April 2007, it was appraised that households use on average 920 kg of wood in winter and 560 kg of wood in summer while in Sindh the numbers are 640 kg and 400 kg respectively. In Balochistan, around half of the population collects their own firewood, while in Sindh most households need to buy their wood. The burning of biomass in inefficient stoves and without proper venting or air exhaust causes serious health problems. According to WHO estimates indoor air pollution is responsible for more than 50,000 premature death per year in Pakistan. Especially women and children are affected as they are most exposed to the smoke and soot from cooking. In addition the burning of wood is contributing to deforestation which is progressing at a rate of more than 2% per year.
A survey revealed that rural households in Punjab spent on average about 9% of the total household income for fuel and lighting. However, poor households are forced to invest up to 25% of their monthly income in fuel, kerosene and batteries due to the dysfunctional market. In general, non-electrified households spend USD 5 to USD 8 per month or an estimated USD 2.3 billion a year on everything from candles, to kerosene lamps, to battery-powered torches.
Due to poor distribution networks, households in rural areas using LPG as fuel pay up to 10 times more than urban households that benefit from subsidized natural gas for residential use.
Rural Punjab survety kis presented as follows:
 Although the above Table presents rural household energy for the Punjab only but nevertheless some important  patterns can be presented . With increasing income  the usual consequences related to energy consumption are : increased biomass consumption , explained by greater access to cattle and land and by increased ability to purchase bio fuels ; greater use of modern fuels and electricity for end uses other than cooking , with lighting typically there is an increase in kerosene use , following a decline at higher incomes as electric lighting is installed; the tendency for the  consumption of modern fuels is to saturate at the highest income level . These trends reflect that: as spending in rural areas increase rural families can buy their way out of biomass fuel and use more efficient and convenient modern fuels.  
Fuels by income group
HESS estimates are presented as follows:

The above HESS estimates( percentage use  ) , suggests that with increasing income : firewood , kerosene, coal  and dung cakes use declines ; whilst that of gas and  electricity increases. Lighting plays a small part in the rural energy usage , but it is important as in lower income groups lighting is the only usage that requires use of commercial fuels . Families view improved lighting as a high priority in achievement of living standards , lighting also presents the lower income groups with substantial expenditure on purchase of equipment , which may be kerosene lamps or electric fittings .. Energy consumption for lighting increases quiet rapidly with income above a certain threshold.
Rural inhabitants produce and depend upon biomass materials of all kind, most if these resources and the land devoted to their production have alternative uses. Different income groups have different access to biomass resources, land and cattle ownership defines the access of these groups but even subtler factors like permission to collect wood or biomass is accorded different to different income groups. Generally those who have the most serious problems have the least ability to respond to mitigate the scarcity, the poorest have the least access to land or cattle or permission to use “free” resources .
Household size determines the quantity of energy used and also it determines the income levels, larger families are richer and use more energy. With household size increase per capita energy could fall of remain the same but total energy consumption increases but at some point the rate of increase in demand is dampened.
Rural Electrification 
The demand for electricity in Pakistan has increased dramatically within the last 5 years. Over half of this demand originates from the Punjab province where the majority of the population resides. Households are mainly responsible the increase of demand the main factor which is preventing the rollout of rural electrification is the increasingly high distribution costs  . Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the revenues from tariffs would never be able to provide the returns needed to recover the investment.
Overall Pakistan is struggling with a poorly performing power sector,. Main reasons for this sub optimal performance is tariffs below cost recovery levels, power theft, insufficient collection rates, and high technical losses   As a result, power generation companies face serious financial problems, making investments in the sector very difficult. In addition, costs of power generation, which is mainly based on fossil fuels, are very high averaging at around 12PKR/kWh and up to 15PKP/kWh if technical losses are included. The main factor which is preventing the rollout of rural electrification is the increasingly high distribution costs. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment. Due to high costs, the government subsidizes electricity tariffs, in order to make them more affordable for consumers. In 2013, government subsidies for electricity reached 1.3 billion USD; however, this did not recover the costs of generation, transition and distribution. “This creates a budget gap that curtails public investment in primary infrastructures, essential for the economic development of the country This circular debt has now ballooned to very large  levels .
Energy Planning
Policymakers neglect in energy planning and energy policies non-commercial/traditional energy sources which are not even represented in national statistics (only electricity and mining). This means that almost 50 % of the consumers which are mainly rural households are ignored in energy planning and the public investments for supply of power.
Moreover, Pakistanis also among the Top 10+1 countries with largest number of people using solid fuels for cooking as shown below in graph
 

Energy Poverty
Most rural households in Pakistan remain in a state of energy poverty. Without access to conventional energy sources like electricity and natural gas, people here, like in many corners of the globe, use a variety of non-conventional energy sources, including kerosene and traditional biomass like firewood, animal and plant waste. These households can be termed energy poor, as the energy sources upon which they rely are not enough to ensure a sustainable, reliable and continuous energy supply. 
UN University conducted a survey in 27 rural communities. They used stratified samples, the first level of which were rural communities that matched their criteria, namely, communities with or without electricity but without access to natural gas. (This was their requirement because households only use traditional energy sources in the absence of natural gas.)
At the second level of sampling, i.e., after selecting the rural communities matching our criteria, we drew a random sample of households to ensure that households with different economic characteristics were represented in the sample. Their conclusions were : the excess inconvenience associated with the energy mix used by rural households ; and a lack of sufficient energy to meet basic household needs — the energy shortfall
The use of traditional energy sources by rural households always comes with associated inconveniences that are not associated with modern sources such as electricity and gas. From the collection of firewood, to the buying of liquefied petroleum gas (LPG), rural households are required to make extra-ordinary efforts to meet their domestic energy needs. They found that 23.1% of rural households experience high degrees of energy inconvenience, spending ample amounts of time and effort collecting or buying different energy sources and 96.6% of rural households experience severe energy shortfalls. The survey revealed that 91.7% of all rural households in Punjab province of Pakistan are in the state of severe energy poverty.
Non Commercial energy

       Traditional sources of energy are easily accessible and affordable for a majority of
       rural households. Their use, however, has serious implications for health, environment, and biodiversity. A higher demand for firewood can result in deforestation, loss of biodiversity, land erosion, and other types of harm to the environment [Heltberg, et al. (2000); Dewees (1989); Liu, et al. (2008)]. In addition, burning animal/plant residue creates indoor pollution that can cause several respiratory and lung diseases [Awan, et al. (2013)]. In addition to health and environmental problems, the use of animal/plant residue has several socioeconomic implications. For example, the collection of animal/plant residue increases the work load on women and children, who are prime collectors of animal/plant residue in rural areas. High deforestation can result in a wood shortage that may reduce the cooking frequency and/or the amount of cooked food, which has implications for the nutritional status of households [FAO (2008)].

       Rural Urban disparity
LPG or kerosene is 10 times more expensive than subsidized natural gas provided for residential use. The price differential between natural gas and petroleum-based fuels is exacerbating socioeconomic disparities between the urban middle class and the rural poor a typical gas bill for a middle-class household is about 500 rupees (Rs.), or $5 per month, for cooking and water heating, whereas LPG users spend over Rs. 2000 ($20) per month for cooking purposes alone. If the gas price for residential use is progressively increased, there is an opportunity to save about a quarter of the natural gas consumed in homes. This opportunity could be seized through the installation of solar water heaters, which cost only Rs. 30,000 ($300). However, these are currently neither viable nor desirable for residential consumers, given the low natural gas prices they enjoy. In essence, home consumers have little incentive to install solar heaters when they receive gas at such low rates. Undoing the subsidy provided to the residential sector will allow the savings to be ploughed back to the rural poor by means of either reforestation or by provision of adequate stoves.
Fuel Wood
Large amounts of fuel wood are consumed for utilization at home. As a result fuel wood is becoming   scarcer in the area. The women now have to travel farther and farther to fetch fuel wood for domestic purposes. The Smokeless Stove is fuel-efficient and it uses half as much fuel-wood as compared to the traditional stove. With the introduction of Smokeless stove in the local community, gathering fuel wood from the area will continue, however, the total amount collected in any given time period will be targeted to be lessened so that the pressure for fuel wood in the area is released and scarce forest reserves are conserved. The Smokeless stove generates heat in a smaller area and is well insulated by mud and brick enclave resulting in a smaller amount of fuel wood needed to generate the same amount of heat in an open fire. The lesser amount of smoke resulting from a smokeless stove compared to open fire cooking reduces the amount of harmful gas emissions, including carbon dioxide and carbon monoxide, contributing to the Green House Effect. To enable improved stoves to be introduced the following steps are needed:
1.         Insufficient policy , strategy and regulation related to use of biomass in the cooking sector
2.         NGOs and CSOs have developed stoves and other products for biomass based cooking but there exists no mechanism to ensure quality of equipment and manufacturing in the long run.
3.         Unavailability of sufficient information and data mapping of biomass resources across the country make policy formulation and design of necessary interventions a challenge.
4.         Market for cook stoves is very fragmented and is dominated by the informal sector.
5.         Limited awareness of indoor pollution and its harmful effects on health within consumers has restricted the uptake of clean and efficient cook stoves.
Electricity is available to about 73% people, there is need to add a million people every year  Similarly gas is supplied to  25% people   about 2.0  million people need to be connected to the gas network, whilst  improved wood stoves , stoves , solar cookers , biogas digesters , LPG air mix plants , doubling the share of wind and solar  energy  as well as  small and micro hydropower and solar heaters need to be provided to the population living in areas where extension of gas -network is not economic  , this process will mean that 2.4 MToE  energy will be added to the total energy supply each year ..To meet these targets about: 2 million people need to be added every year to the gas network; 0.35 million stoves need to be provided every year; share of biogas, biomass, wind, solar and micro hydroelectricity will need to be increased by 10% every year.  To achieve targets of provision of energy to people living away from sources of commercial energy the following is recommended:
1.                   Launching a national wide program for provision of clean cook stoves through private- public partnership. NGO have developed such clean stoves.
2.                   Financial mechanisms such as micro finance, consumer finance, and concessionary soft loans will be promoted for distributed solar systems and energy efficiency retrofits.
3.                   Off grid lighting programs targeted to the: 27 poorest districts of Pakistan; 3 poorest districts of AJ&K; 9 poorest districts in GB, need to be prioritized.
4.                   About 0.8 million households will have to be provided alternative   sources of cooking energy each year to reduce usage of traditional fuel for cooking .
5.                   60 No’s LPG Air mix plants need to be provided in next 5 years.
 

Rural and urban wood energy consumption

 Rural and urban wood fuel consumption have distinct patterns. Specifically, available data indicate or explain the following distinguishing characteristics between rural and urban fuel wood:
·         Fuel wood consumption tends to be higher in rural areas, with more households in rural areas using fuel wood.
·         Fuel wood tends to be the dominant fuel for rural household energy end use, particularly cooking. In urban areas, fuel wood competes with other fuels and might not play the dominant role.
·         Cooking takes up a big portion of rural household end use energy consumption. In urban areas, other end use energy consumption can be significant.
·         Household income determines fuel wood and total energy consumption to a large extent, but the pattern or degree of influence is distinct for rural and urban areas. For example, the shift to modern fuels with increasing income is more pronounced in urban areas.
The rural areas account for the bigger portion of total fuel wood consumption. In Pakistan, for example, the rural fuel wood consumption exceeded urban fuel wood consumption by a factor of more than five, equivalent to 84% of total fuel wood consumption.   
Fuel wood, therefore, tends to be the dominant fuel in rural areas and is primarily used for cooking. In the rural areas of Pakistan, fuel wood accounted for close to 60% of household energy use.  In urban areas, fuel wood competes with mostly modern fuels.   Urban Pakistan in which natural gas accounted for 30% of household energy consumption, while fue lwood’s share remained at around 38 %

Wood fuel flow

The contrasting characteristics between rural and urban fuel wood consumption also determine how fuel wood supplies reach the final energy consumers. In rural areas, fuel wood is not usually a commodity that is traded as in urban areas. Available data show that in most cases, fuel wood in rural areas are collected freely from the local environment, while most, if not all, urban households buy fuel wood and charcoal from traders and retailers. However, there are indirect costs associated with acquisition and use of fuel wood in rural areas. These costs are linked to the accessibility of fuel wood sources. Rural households, in particular women and children, in many cases spend considerable time and travel great distances to collect fuel wood. In urban areas, wood fuels are commodities that compete with other fuels to satisfy household energy needs. Moreover, there is stronger tendency for urban fuel use to increase, diversify, and switch from fuel wood and charcoal to commercial fuels (for example, LPG and kerosene). Thus, fuel consumption patterns in urban areas may be changing more rapidly than in rural areas.The sources of fuel wood is presented as follows:

Table: Sources of Firewood for Urban and Rural Households by Income Class, Pakistan
(in percent)
Rural
Low
Medium
High
Total
Buy only
22.5
29.8
40.2
28.8
Collect only
69.1
58.5
50.8
60.9
Buy and Collect
8.3
5.7
9.1
10.3
  
Urban
Low
Medium
High
Total
Buy only
78.4
85.0
91.6
84.3
Collect only
18.8
9.4
5.8
11.5
Buy and Collect
2.1
5.8
2.3
4.2
Source: Ouerghi and Heaps (1993)

Moreover, wood fuel flow studies provide information about opportunity cost associated with fuel wood collection. It is shown, for example, for Pakistan that this tends to be higher in rural areas because of the greater time and distance involved.
Wood fuel flow studies also reveal the main actors in the fuel wood supply and demand chain. The main agents in fuel wood collection, for instance, could vary with respect to land ownership.   The extent of their involvement depends on the income class as indicated by land ownership. The landless class, therefore belonging to the lowest income level, employs more women and children, while the big farmer class, with presumably higher income, employs more hired labor in fuel wood collection.
Figure

 Wood fuel supply
Fuel wood is sourced from forest and agricultural lands.   Pakistan have less than 10% forest cover .   However, later studies also show that more and more fuel wood is being collected from non-forest lands. In Pakistan, The HESS survey shows that 40% of sampled households in Pakistan collect fuel wood from private lands and another 32%, from own lands. Only 13% are collecting from state forest lands.
However, these national figures have to be interpreted with caution else one may be misled to think that forests have become an unimportant source of fuel wood. Information at sub-national levels should give a more accurate picture. It is shown for Pakistan that more households than the national average are collecting from state forest lands in three of the four provinces of Pakistan, where the extent of forest areas is greater. In the other province, where forest lands are limited, households naturally go to places where trees are available. Moreover, forest lands account for only less than three percent of Pakistan’s total land area, thus limiting the forests’ contribution to total fuel wood supply.  . \Thus, fuel wood collection practices are also dictated to a large extent by the availability of trees.
Table: Sources of Collected Firewood, Pakistan 
(in percent)

Punjab
Sindh
NWFP
Baluchistan
Pakistan
Own land
38.7
14.1
39.9
8.4
31.7
Other private land
40.1
55.3
24.4
9.9
40.3
Common land
9.9
9
14.7
48.1
12.1
State forest land
8.4
17.8
17.1
26.3
12.6
Other (waste wood, etc.)
2.9
3.8
3.9
7.5
3.3
Total
100
100
100
100
100
Source: Ouerghi and Heaps (1993)
Forests
Pakistan has 4.2 million ha of forest and planted trees, which equates to 4.8 percent of the total land area. Forty percent of the forest area comprises coniferous and scrub forest in the northern hills and mountains. The balance includes irrigated plantations, riverine forests along major rivers of the Indus plains, mangrove forests of the Indus delta and trees planted on farmlands.
With only 0.05 ha of forest per capita against a world average of 1.0 ha, Pakistan is comparatively forest-poor. The high population growth rate   is pushing the figure further down and, at present, it is not possible to expand public forest area at a high enough rate to keep up with demand for forest products. However, farmers are encouraged to establish plantations on farmlands and wastelands to help ameliorate the situation.
Benefits from forestry in Pakistan include the following:
  • Five hundred thousand workers are employed in forestry and related industries such as logging, village carpentry and manufacture of timber components for the construction industry. However, the forestry sector contributes only 0.3 percent to GNP.
  • Between 1996 and 2000, on average, 31.66 million m3 of round wood and 2.35 million m3 of industrial round wood were produced annually from state forests and farmlands. A further 532 000 m3 of industrial round wood was imported annually to meet national demand.
  • Forests supply 32 percent of Pakistans total energy needs in the form of fuel wood. Ninety percent of rural and sixty percent of urban households use fuel wood, together with other forms of biomass as their primary energy source. 
  • Forests provide forage for one third of Pakistans 86 million head of livestock. Leather, wood and other livestock products contribute US$400 million or 9 percent of total export earnings. Trampling and browsing by increasing numbers of livestock are causing forest destruction and uncontrolled grazing is a major obstacle to sustainable forest management.
  • Forests are vital in protecting the catchment areas of reservoirs used for power generation and irrigation. Agriculture, which contributes 26 percent to GDP, is highly dependent on irrigation in Pakistan and annual losses due to flooding, soil erosion in upland watersheds and siltation in reservoirs and irrigation works is estimated at Rs.2.3 billion.
Northern Irrigated Areas
 More than any other area, this region (consisting mostly of Punjab), suffers from high population pressure and high fuel wood production needs. However, it is probably closer to maintaining a high-throughput fuel wood production system than any other region. The transition to a sustainable management system seems to be further advanced in these areas than elsewhere. However, care should be devoted to ensuring that neither structural impediments nor institutional barriers should be allowed to prevent this transition from following through to completion.
Southern irrigated areas
 Comprising mostly Sindh province also faces high population pressure. It also needs to be transformed into a high throughput fuel wood production system. At present, it appears to be lagging behind its northern neighbor in the transition to high production/high consumption sustainability, and the reasons are not immediately obvious. 22 During monitoring, attention should be paid to seeing that rapid progress occurs in this transition, and that tree-planting and production continue to increase in importance. Despite this concern, it must be pointed out that Sindh has been densely populated and heavily cultivated for decades. Unless it can be shown that some critical threshold is about to be crossed, the situation does not call for desperate actions, but rather concentrated attention.


Conclusion
Because of the limited access to modern energy sources, households rely on traditional sources excessively, which may have a negative impact not only on human and animal health but also on the environment. These results suggest that the conversion of traditional energy sources into modern ones, such as, biogas, use of energy efficient appliances, etc. can have a positive impact on the environment and sustainable economic growth.
The energy plan of the country addresses only commercial energy, non commercial energy is not made a part of the national energy plans. This is a serious shortcoming as significant amount of energy is consumed in the rural sector and in the near future the decision makers might get a surprise if firewood or agriculture waste is not available. It is absolutely essential that energy plans address the non commercial use as well. There is not enough data to do that, it is suggested that Hydrocarbon Development Institute of Pakistan (HDIP) who prepares the Energy Year Book should also be entrusted with the responsibility of collecting non commercial energy data. The Institute be funded and staffing increased so that in the near future enough data is available to prepare meaningful energy plans.

 Compared to HESS surveys If both the scope of the survey instrument and the size of the sample were reduced, the monitoring activity could be carried out on an annual or bi-annual basis at a relatively limited cost. Once again, the facilities of FBS could be used effectively for the questionnaire administration, but the analysis could be most effectively carried out by the staff of the Energy Wing Ideally, the questionnaire should contain minimum information about fuel consumption, socio-economic characteristics, appliance ownership, and tree-planting to allow a comparison with the larger questionnaire used as part of the HESS project. But the questions could be reduced in complexity in order to facilitate its administration. Although some calculations are necessary to suggest the magnitude of the sample to be used, a target might be set at 10% or 20% of the larger HESS sample of 4800 households. In this way, the cost and time commitment necessary to carry out the survey could be reduced so that it could be repeated every second year. After five or ten years, it would then be desirable to re-run the entire large exercise. In this way, household energy can become a module of the normal household survey rotation used in Pakistan and other developing countries. This rotation would enable the Energy Wing to monitor what is happening in the field and fine-tune policies in order to incorporate the latest trends. It would also enable the Energy Wing to identify the trends are, since at present, they only have one data point to work from.


Update: Mar., 11, 2019
Only 20% of Pakistan’s population has access to clean piped natural gas (PNG) while the rest use biomass in the form of uplahs and shrubs or even trees, which causes deforestation. Most of the biomass, in the manner it is used, causes health issues as smoke and carbon dioxide create lung and eye syndromes and uplas involve bad hygiene. A smaller percentage uses expensive liquefied petroleum gas (LPG) or kerosene. If rural migration is to be discouraged, lives in these areas have to be improved.
The PNG network cannot be extended to these areas. LPG, biogas and kerosene are the alternative clean fuel options. Already, small and poor consumers in urban centres are being offered PNG at highly subsidised rates. However, the poor in rural areas are without any subsidy in this respect. According to the Oil and Gas Regulatory Authority (Ogra) report (2016-17), annual LPG consumption stood at 1.2 million tons, with share of domestic, industrial and commercial sectors at 37%, 36% and 27% respectively. The LPG’s share in gas market stands at less than 8% and 58% of LPG demand is met through local production and the rest is imported.
LPG is almost as expensive as petrol. LPG in February 2019 was sold for Rs121 per kg at Ogra-controlled rates and Rs150 per kg in the black actual market. In terms of British thermal units, which enable us to compare prices across fuels, this boils down to Rs2,669 per million British thermal units (mmbtu) at controlled rates and Rs3,309 in the actual market.
Compare it with the PNG tariff of Rs142, LPG prices are 19 times higher and comparing with the highest PNG tariff, which is being contested, LPG prices are 83% higher. Only 20% of people have access to the PNG network while the rest are consuming biomass and the wealthier ones use LPG. Clearly, some reforms are required in LPG prices.
LPG is subsidised in India for the poor and the subsidy is transferred directly to the accounts of LPG consumers to avoid misuse. On February 8, the subsidised LPG price was INR493.53 per cylinder of 14.2 kg. There is a subsidy of around INR200 per cylinder. In Pakistan, the Ogra controlled/suggested price is Rs1,427 per cylinder of 14.2 kg, which is 30% higher than the corresponding price in India. However, India is trying to substitute LPG with PNG. Possible motivation could be convenience, safety and price. In Pakistan, the retail LPG price of Rs2,669 ($19.34) includes 23.3% of GST and other taxes per mmbtu as opposed to the highest gas tariff of Rs1,460 against which there is a lot of hue and cry.
LPG prices are almost equal to gasoline prices and twice those of compressed natural gas (CNG). Thus, it appears that, there is practically no advantage in using LPG as a substitute of gasoline. However, CNG prices are almost 50% of LPG and gasoline prices, a clear substitution case. Kerosene at Rs82 per litre is 77% of high-speed diesel (HSD) price and 91% of gasoline price. The incentive for adulteration is there by mixing cheaper kerosene with expensive HSD and is reportedly being done.
In India, kerosene is sold for PKR56 per litre as opposed to Rs82 per litre in Pakistan. In some states like Chennai, it is sold at 50% of the price elsewhere. India is moving towards PNG and LPG and kerosene demand is going down there. There has been and continues to be a major adulteration problem in India of mixing cheaper kerosene with expensive gasoline and HSD. Kerosene subsidies are going down in India. Kerosene and LPG rates are almost equal there in terms of mmbtu.
There is a general case of subsidies on LPG, if LPG prices are compared with PNG prices. At a minimum, exemption from all taxes may be considered – after all largesse and support should not be restricted to the areas on PNG network. LPG-air mix plants have been set up keeping this in view. However, these plants benefit the rich who live in the developed network areas. Poor invariably lives in remote and least developed areas.
As a reference, the gas tariff of LPG-air mix plants of Rs600 per mmbtu may be kept in mind. However, it may be too much of a subsidy, if extended to the LPG cylinder. LPG-air mix and LPG cylinder should have some comparability, if not equality. In northern areas, there is a humanitarian case as well as environmental one to provide cheaper alternative fuel. Poverty is widespread there and trees are cut for household fuel needs. LPG is sold in the black market at much higher prices than in lower areas.
There is a strong case for providing subsidies both for kerosene and LPG in these areas. The minimum subsidy is the waiver of petroleum levy and GST. This subsidy can be a general one and additional subsidies out of the budget should be provided to the poor. Although reference to India is not liked, one is prone to suggest Indian subsidised LPG pricing.  On the same argument, there is a case for subsidy on kerosene. So long as poverty and inequality persists, there will be a strong argument for subsidies to the poor, be it in fuel or elsewhere.
Subsidies are always misused and opposed by the International Monetary Fund (IMF). Cheaper LPG meant for northern areas may be sold in lower areas or for commercial vehicles. No perfect safeguard is available against malpractices. However, solutions can be explored and implemented. Involvement of public-sector companies in distribution, special cylinders, etc can be adopted as a safeguard.
Eighty per cent of the population is using LPG, kerosene or biomass. Biogas can be cheaper and competitive in agricultural rural areas, requiring attention of the policymakers. LPG-air mix plants have been installed and the present government has not cancelled those schemes.
Biogas may substitute LPG in agricultural areas. Biogas-based small distribution networks are feasible. Provincial governments and local bodies may be encouraged and facilitated in establishing these plants.
Biogas is not a new concept. It has not acquired a market share as it could have. Most of the biogas schemes have been for small family-sized production for individuals. There has not been much of a movement for community-based production and distribution.

Public-sector companies like SSGC and SNGPL are in best position to play a facilitating role. A policy is required to encourage and finalise such systems. Technical assistance, demonstration projects, cheaper credit and loans can go a long way in increasing the role of biogas and improving living conditions in rural areas. Punjab and Sindh are adequately positioned in this respect. Community solar and biogas is the name of the new order.