ISLAMABAD – The Minister for Water and Power Syed Naveed Qamar said, on Tuesday, that the government plans to launch exchangeable bonds between $500 million and $1.0 billion for state owned Oil and Gas Development Company Limited (OGDCL) within this fiscal year. This would help permanently address the issue of inter-corporate circular debt in the power sector. Talking to the media after concluding session of the three day Pakistan Energy Conference 2011, the minister stated that floating of bonds was under consideration to end circular debt.
“The government would not incur any major financial loss as the payment made for eliminating circular debt would end up in the state coffers after zeroing balance sheets of different entities”, he said. OGDCL is the one of the most profitable public sector entities, which earned a profit of Rs 55 billion last year. The company has Rs 110 billion stuck in circular debt – recoverable from refineries and gas utility companies. Regarding elimination of power subsidies, the minister acceded that it remains a difficult task, which could have been easily resolved in the first three months after the government came in power.
He maintained that the country’s energy demand was moving up and there was a need to rebalance the entire energy mix. In the short run, he attributed LNG imports as the solution, while he stressed generation from the Thar coal reserves as a medium term solution. The low BTU gas reserves should be allocated to power generation. He asked the private sector to provide names for inclusion in the proposed energy council and suggestions the terms of reference of the committee, within one week. “There is a dire need for greater communication across the board for decisions and implementation.”
While addressing the conference, Petroleum Institute of Pakistan Chairman Zaiviji Ismail said that the government needs to realise that, in a $100 plus per barrel of crude price environment, existing policies in exploration and production sector needs to be realigned. “If appropriate steps are not taken, then crisis may worsen.” The government and industry should work together for a workable integrated energy plan, which has been proposed as the way forward for the country. “There are enough resources available, if we have the will it could happen.”
Stressing on the need for an immediate set up of energy council, he said that it would create an enabling environment to resolve power sector issues, expediting conventional and non-conventional exploration, development of Thar coal fields, fast tracking LNG imports, deregulation and energy conservation. Senior government officials, public and private sector stakeholders and policy makers deliberated on various energy issues, in addition to potential areas which need to be focused for addressing energy crises in Pakistan.
