Emerging Energy Scenario: Issues & Priorities

Energy experts urge government to invest in effective policy-making, governance

Experts at a seminar held at Institute of Policy Studies (IPS) have urged the government to invest in effective policy planning for the energy sector and learn from the lessons and shortcomings of the past, which have resulted in the present energy crisis, especially the chronic circular debt issue.

Chairing the seminar, Mirza Hamid Hasan, former Secretary Water & Power and Chairman of IPS’ research program on energy issues, was of the view that the Planning Commission of Pakistan has been reduced to the role of a project approval agency and it was at a standstill for the last several years on its main objective, i.e., to do forward planning for the country.

The seminar, titled “Emerging Energy Scenario: Issues & Priorities”, was addressed, as main speakers, by Syed Akhtar Ali, Member (Energy) of the Planning Commission, Ministry of Planning, Development & Reforms, and Muhammad Arif, President, Energy Lawyers’ Association of Pakistan. It was attended by a number of energy experts, officials of the concerned government ministries and departments, policy researchers, industry representatives and media personnel who discussed the issues, challenges, and priorities of Pakistan’s energy sector at length.
Syed Akhtar Ali defended the government’s position by revealing that the policies vis-à-vis energy sector are investor friendly and specially the tariff being offered in renewable energy is comparatively much higher than other parts of the world. He gave the example of the tariff for wind energy, which is between 4 to 8 cents internationally but in Pakistan it has been fixed at 14 cents to attract investment – almost double from India’s.

He also revealed that the much-hyped coal-fired electricity generation projects of Gadani, Balochistan have not been dumped altogether. Rather, on the request of the Chinese firms they will now be installed at Port Qasim, Karachi.

He earlier presented a brief of various measures taken by the government to cope with the energy crisis including strengthening of transmission infrastructure, expansion of energy production and supply mechanisms, promotion of renewable energy resources and attracting foreign investments for the purpose.

He said that the government was not oblivious to the idea of developing its indigenous resources like coal and hydel to provide a rather sustainable solution to the country’s energy problems. He however admitted that there were constraints of numerous sorts, including fiscal, technical, etc., which the government had to consider while devising its policies. He supported his argument with the suggestion of using LNG over coal as a quicker, as well as logistically manageable solution.

Muhammad Arif stressed the government should allocate adequate budget for oil and gas explorations on war footings as about two third of the country’s potential area was still unexplored. He also advocated against the idea of privatization of institutions like OGDCL, maintaining that the country’s strategic assets must never be privatized as historically the idea has yielded little success in cases like PTCL and KESC.

The speaker maintained that the frequently used term ‘energy shortfall’ should rather be corrected to ‘financial shortfall’, as it was originally the lack of financial resources that was hurting the cause.

The interactive discussion following the presentations also underscored the need to check the exploitative interest rates of the banking sector in financing the energy projects, which are causing exorbitant tariff rates ultimately. The experts also raised concern that by allowing such high interest rates against project financing the regulator was protecting the interest of the banking sector instead of the consumer.

In his closing remarks, Mirza Hamid Hasan, underscored the need for energy conservation and effective governance to control the spiraling circular debt as short term measures to meet the energy needs of the country. He also called for action against all defaulters to solve the circular debt issue.