KCCI wakes up and smells the coffee… and a rat


The businessmen of Sindh specially Karachi led by Karachi Chamber of Commerce & Industry (KCCI) have approached Prime Minister Yousuf Raza Gilani against the forth coming energy conference while showing their serious concerns about the conference and its apparent objectives.
Showing deep reservations and concerns regarding the Energy Conference which has been scheduled to be held in Lahore on April 9, 2012, KCCI, in letter sent recently, has informed the Prime Minister that firstly, this was being held at a very short notice and the business community of Sindh has not been taken into confidence nor invited to participate in the prior and preparatory deliberations of the conference. Also the objectives and some Agenda components unfortunately carry negative connotation. “We are apprehensive that this debate being undertaken in the background of Government of Punjab sponsored “energy riots” in Punjab may add fuel to the fire and may accentuate the on-going attrition amongst a range of stakeholders especially amongst the federating units. This, at this point in time, will not augur well for the political and economic well being of the country”, it said. According to the letter the main objectives of the conference especially the objective at “b” states, “Develop consensus on fair, equitable and transparent distribution of available energy among the federating units” This objective denotes that the current distribution is probably inequitable and not transparent whereas in reality the distribution of energy is being undertaken in accordance with the Constitution of Pakistan. Hence putting out such an objective in itself tantamount to questioning the basic parameters and framework enshrined under the Constitution of Pakistan.
It is extremely important to put across some fundamental facts before the Honourable Prime Minister relating to current energy crisis
The existing electricity shortages to a large extent have accentuated because of shortage of ‘Gas’ as such it is important to explore how these shortages have happened.
The country is presently producing approximately 4000 MMCFD of Gas from all Gas Fields compared to 3800 MMCFD in 2008. Hence there has been a definite growth in supply of Gas. What has caused the shortages is basically the manner in which it has been used in last few years.
SNGPL in last four years has laid out around 36000 km of additional Gas Pipelines for supply of about 750 MMCFD of Gas to multiple entities especially the rural villages, CNG stations and also to some big consumers.
The Federal Ministry of P&NR and SNGPL were aware that there are likely to be Gas constraints as such the Supply Side should have been more responsible and undertaken after due diligence and examination of pros and cons. To us, this frugal and irresponsible “Supply of Gas” by the SNGPL is one of the root causes that has led to severe Gas shortages in last over a year which in turn has impacted the power supply as well.
Gas companies are allocated fixed Quotas. It is SNGPL, who in 2008 started allocating new Gas connections exceeding their allocated limits. In the same period SSGCL entertained only 150 MMCFD additional Gas connections in a very conservative and cautious manner. It is important to mention that as of today SSGC has a backlog of applications for more than 350 MMCFD, which in turn can generate 150,000 new direct employments and numerous indirect jobs. In case SSGC and Government of Sindh had not taken a cautious stance and additional connections would have been given to generate more employment then the situation in Sindh could have been the same which prevails today with SNGPL. Hence in all fairnss Sindh has sacrificed its progress at the cost of ‘National Interest’. It is also a fact that Sindh Government has developed Industrial Estates which are not yet colonized due to paucity of Gas. There are 1000 plots in SITE-II, & huge number of Plots in Port Qasim, and many in Textile and Garment City awaiting Gas connections. Critical question is “Can Sindh be penalized for being circumspect and informed and adopting policy of connections keepiong in view the supply side?” In case Government of Pakistan does not acknowledge the rational attitude the tendency for irrational decisions will take root.
Sindh provides 72 percent of Gas and it has a Constitutional Right under Article 158 of the Constitution over its use. This is explicitly provided and it will be very unethical to challenge this provision relating to the right of the province where such resources lie.
Despite this clear provision under the basic charter, the distribution of Gas over the years has always been undertaken ‘fairly’ and in the overall interest of the country.
Hence despite, the Article 158, Karachi faced severe shortages of Gas in last winter and there was continuous load shedding from November-2011 to March-2012 which impacted Industry and KESC.
Agenda Item I: Generation Distribution and Conservation
– In the Agenda relating to Group I, there is an item ‘f’ saying ‘Is there a case for continued supply to privatized KESC from NTDC system when load shedding in Karach is 2-3 hours but in rest of country is 12-16 hrs”. This is an unfortunate Agenda and it reflects upon the mind set and the basic agenda of the conference organizers.
The facts are that KESC is an Independent Private Company and it is being given 650 MWs of electricity from the Country’s Hydel Resources so that it receives same ‘Energy Mix’ as being distributed to other entities. This again is a constitutional matter and by questioning this, the draftees of the Agenda probably wish to deny the economic & financial hub of the country the same ‘Energy Mix’ as available to other cities. The less hours of load shedding is an outcome of ‘Electricity Management’ by KESC as it allocates energy to its ‘paying clients’. This efficiency is sheerly on account of “KESC Management” rather than on account of taking away any other federating units share. Hence by incorporating such unconstitutional items, the entire framework of this conference and its objectives have become seriously tainted and malafide. In our view, this conference is unlikely to yield any worthwhile results and will only breed further difference especially given the current political climate in the province of Punjab.
In this background, it is sincerely recommended that instead of reopening and questioning issues settled under the Constitution of Pakistan, the Government should concentrate on “Resolving’ the major bottlenecks and move ahead and take strategic decisions required to bring more energy on the grid and by taking the required reform and governance actions for containing losses, and leakages.
Some energy ‘doables’ in the short to medium run can be:
– Undertake urgent exploitation of “Indegenous Resources’ which can quickly relieve the pressure on the expensive imports of oil and the fast depleting Gas reserves.
GoP is presently importing 6 million tons of coal. KESC & PEPCO have already finalized projects for converting their Power Plants from Gas/Oil to Coal. This will increase the imports of coal to over 22.0 million tons within next one year or so. GoP can save oil and coal imports by facilitating the Government of Sindh in undertaking speedier actions at Thar Coal Mining.
GoS needs to be encouraged to undertake Minning through its Own Resources for establishing a ‘Washing & Bricketing Plant’. Such facility alone can provide a massive saving of Gas which can be diverted to Industry. Cheap supply of fuel to Power Plants will help in bringing down electricity prices considerably.
Provinces must be encouraged to make investments in RE projects especially Wind, Small Hydro, Solid Waste and Sea-waves/Tidal energy projects. WB / ADB may be requested to help provinces to build capacity on RE projects.
Policy be framed on “OFF GRID” solutions for villages and separte settlements like one under taken at Surian Cantonment RYK urgently so that valuable Gas resources / electricity is conserved for profitable and economic requirements of the country.
Transportation can only be subsidized by revitalizing Pak Railways and bringing in LRT in mega cities, rather than allow precious Gas resources use in CNG.
Things will become better during summer and Insha Allah after commissioning of new Gas Fields including Kudan Poshaki, Sanjhero, Sawan, Latif, Reti Maroon, which will add approximately 350 MMCFD of additional gas to national bulk.
There is complete consensus that it is primarily on account of lopsided priorities, poor management and massive leakages and lack of accountability which are the primary reasons for dearth of energy in Pakistan. There is an urgent need to put in place an Action Plan rather than politicize and create further attrition. A collective national effort is needed to face the challenge. Prompt measures need to be taken by the government instead of opening up contentious debate.