Lack of expertise hampering gas crisis resolution

Government is facing hurdles in vying to resolve energy crisis due to; lack of expertise in concerned ministries, failure to reduce the price difference of different fuels, delay in backing energy imports, absence of rules for regulating the sector after devolution, and above all the failure to address circular debt.

SHORT SIGHTEDNESS

According to official sources, short term measures taken in the last four years with no long term planning due to lack of expertise at the central level has led to the present energy dilemma.

MINISTRY NONCOMMITAL

Petroleum Minister Dr Asim Hussain has complained that finance ministry was noncommittal on the proposal that sought reducing Rs10 per litre petroleum levy on to bring its prices closer to CNG. He is of the opinion that reduction in levy will not affect government’s revenue as petrol sales volume would increase with price parity. It would at least allow additional gas supplies to the fertiliser, power and industrial sectors.

technical expertise

Lack of professionals in the ministries of water and power and petroleum is another major handicap. The ministry of water and power had to temporarily bring in a professional from NESPAK for better management of its power wing. Petroleum Minister has ordered hiring of an Executive Director General Hydrocarbons from the market to head the technical wing of the ministry to put existing staff on the right track. He has also ordered hiring of at least 25 per cent new staff members in lieu of incumbent promotees and deputationists. Even so, establishment of technical wings in both the ministries were being delayed due to red tape.

INTER-PROVINCE SKIRMISHES

The implementation of new petroleum policy has already hit snags, as Khyber Pakhtunkhwa and Balochistan want to regulate the sector and own the royalty without giving any control and share to the federal government. An official source said the situation could have been averted if the concerned officials had bothered to address the concerns of the province before and during policy making. Now the matter has been again referred to the Council of Common Interests (CCI) for resolution, even though earlier the Law Ministry had interpreted that the centre would continue to regulate the sector and would have a share in royalty.

indigenous exploration

Delay in petroleum policy means that no new blocks could be awarded for oil and gas exploration, the last auctioning of blocks was held in 2010 before the approval of the 18th amendment. But there were other constraints in promoting indigenous exploration, as summarized before the National Assembly Standing Committee on Petroleum by Secretary Petroleum Ejaz Chaudhary who said that Ministry of Defence had refused permission for an aerial survey of Kharaan block in Balochistan. The source said changing the expensive fuel mix is major issue for the government which could not be resolved by expediting indigenous oil and gas exploration. This requires a national consensus to be implemented on war footing. Government has opted for the safest way to address the power crisis by enhancing the power tariff, which despite being increased by a massive 75 percent during the last two fiscal years has failed to resolve the problem. People are being burdened with a high power tariff but still have to fret for hours due to long blackouts.

Lack of investment

Lack of public sector investment is another major cause for slow progress in hydel and coal sectors. Private sector investment has been on the hold, as the local banks are reluctant to finance any new projects till the resolution of circular debt. Independent Power Producers (IPPs) receivables have been increased to Rs266 billion on December 31, 2011. They have to repay Rs150 billion in debts to banks by the year end. Circular debt is also affecting the prospects of the private sector LNG imports in the country, as some of the investors have started seeking sovereign guarantees if their dues are not cleared in time by private sector entities. LNG imports will be used for power generation but if circular debt is not rooted out nobody would be making $2 billion investment for the imports.

The Kalabagh imperative

Economic analysts have repeatedly said that the most viable project for hydel power generation remains the Kalabagh dam but the failure to have a national consensus was delaying its execution.