Enabling investment environment in energy sector discussed in IPS seminar

The factors serving as impediments for investment in Pakistan’s energy sector are numerous but first thing is the perception about Pakistan that has to be changed to attract investment.

The factors serving as impediments for investment in Pakistan’s energy sector are numerous but first thing is the perception about Pakistan that has to be changed to attract investment.

This seemed to be the bottom line of a panel discussion at the Institute of Policy Studies, Islamabad in which foreign investors, government officials, experts, lawyers and professionals in energy sector had put their heads together on the topic of “Enabling Energy Investment in Pakistan” to assess the situation and to work out solutions for bringing the country out of the crisis with respect to energy supply. Among the panelists were Abdul Rahim, former member NEPRA; Naveed Ismail, CEO of Genco Holding Company; Muhammad Arif, President Petroleum Lawyers Association and Zaigham Rizvi, consultant, World Bank. Mirza Hamid Hassan, former federal secretary, water and power and chairman IPS Steering Committee on Energy presided over the session.

Underlining the significance of the energy supply, it was noted that in its landmark judgment on Rental Power Plants, the apex court had termed the ‘reliable energy supply’ as one of the fundamental rights of the citizens. On the contrary, the whole country, excluding Karachi, is functioning just over 8500 Mega Watts of electricity per day which is less than many cities in the world. Energy policies, like other national policies, are driven by short term political interests and change in policies of previous government is almost a must for every incumbent government without taking into consideration what might be at stake and what were the strengths and weaknesses of the previous policy.  To further aggravate the problems, even these faulty and inappropriate policies are not put into practice and the whole scenario remains uncertain and unreliable.

It was observed that widespread corruption, absence of fair practices and bureaucratic obscurities too had played a visible role in not only keeping the new investors out but also to evict the existing investment companies from the country. Various examples were quoted during the course of discussion where foreign investors felt aggrieved by the decisions that were politically motivated but had no forum to which they could raise their grievances. It was observed that foreign investors who bring jobs and prosperity in a country and are highly valued in other countries are met with skepticism by the policy makers and opinion makers and are deemed to be fleecing money out of Pakistan.

It was also highlighted that the laws and the institutional framework too seems lacking and the laws of pre-partition era are still in place with minor adjustments. The recent eighteenth amendment has rather made the things more ambiguous and the difference of interpretations among the federal and provincial governments has hampered the oil and gas exploration activity for months and no move has been made to bring clarity to the policy. The risk perception for the investment too is not assessed from the point of view of an investor and the policies are not adapted accordingly.

Moving towards the solutions, it was suggested that the government should show commitment to the nation and the future of the country and its national energy policy should be based upon the consultation and contributions of all the stakeholders. The security situation and perception about the country has to be improved and corruption has to be checked. National energy objectives have to be spelled out clearly and objectively and short term, medium term and long term strategies have to be chalked out.

It was also suggested that the utility management services, including energy, should not involve too much government interference. The government should act only as a fair judge between producers, distributors and consumers of energy. According to a proposal, the loans for housing should include cost of solar installments which may not bring a major change as far as national energy situation is concerned but will offer direct relief to the people. Hydro and nuclear energies were seen as the long term solutions for domestic energy needs while it was suggested that investors should be incentivized into the coal-based energy production which offers a viable medium term solution.

Director General IPS Khalid Rahman concluded the session saying that the failure of successive Pakistani governments should not be equated as failure of Pakistani state. People of Pakistan, he added, had a lot of potential and the only thing that Pakistan lacked was that government could not establish a trust among the masses.