Considering Pakistan’s unprecedented energy crisis, and imminent gas shortage as winter draws near, the government is advised to seriously reconsider the energy sector’s structure of governance. I recommend creating an autonomous integrated energy ministry to work out technicalities of tapping Pakistan’s indigenous endowment along with streamlining projects that secure long term supply. This will provide a largely directionless government with some sort of solid footing, so at least the right hand will know what the left is doing.
With regard to electricity, our ideal mix should comprise hydel, coal, wind and solar energy. Diversifying the supply base will not only ease the government’s present burden, but also optimise use of indigenous resources without any meaningful impact on the balance of payments. A more diverse mix will lower energy cost over time, making it more affordable for consumers. By not tapping all available resources, especially coal, wind and solar, we continue to move away from our optimal energy mix, burdening every day life and impacting industry and manufacturing to the downside.
So far, authorities have also been behind the curve in exploiting water resources. Presently, only about 30-35 per cent peak hour energy is hydel-generated, that too for a limited period of time owing to water scarcity. And considering declining gas reserves, and lack of progress in developing alternate avenues, primary focus continues to be on oil. Yet the rush to black gold bids up its price, begging the question as to how long can the poor man be burdened with rising prices because of government inefficiency in securing uninterrupted energy?
In the short-term, it would be smarter to switch to gas. Not only is it 20-25 per cent more efficient, but also more cost-effective. But it bears noting that unless complemented by aggressive advancement on developing Thar coal reserves and Balochistan’s wind corridor, the gas measure will also fizzle out sooner rather than later. The government has been providing concessions for the corridor for a long time now. It must now take a clear position. If it cannot deliver on its 50,000MW/day potential, then these concessions will only amount to unnecessary leakages, and must stop.
Thar’s coal reserves are the perfect example of our under utilised energy generation potential. They possess the capability of producing 100MW for a hundred years, yet the government delayed proactive exploitation of these resources for far too long. Thar is among our most important sources of energy. It tells a lot that among our neighbours India and China produce 57 per cent and 73 per cent respectively of their energy mix through coal. In Pakistan, the number is under one per cent. There is also a strong case for solar energy, especially in places like the plains of Balochistan. The area’s dispersed pockets of population make laying long transmission lines and setting up grids economically unfeasible. It would be more prudent to invest in small solar energy centres in all cities to distribute electricity locally.
Unless we make substantial and quick progress on these issues, the energy problem will intensify. The present situation is unsustainable. Line losses amount to approximately 34 per cent, with each percentage point costing the exchequer to the tune of Rs6-6.5 billion. Also, failure to collect receivables worth Rs125 billion from the public sector and R100 billion from the private sector indicate growing inefficiency and corruption typical of not only energy companies, but also prominent public sector enterprises.
At the risk of repetition, the only way forward is forming a holding company mandated with engineering a turnaround in respective companies and preparing them for strategic sale. So long as this step is put off, so long these companies will remain a wasteful expense for the government, restricting its overall fiscal space just when it is desperately needed to stimulate the economy out of stagflation. Not only are we nowhere near self-sufficiency in energy production, we also continue to hold off import of LNG despite the Supreme Court’s Apr ’10 decision, amounting to criminal neglect of the country’s most pressing need. Energy is, for obvious reasons, the most important input when it comes to raising national productivity and subsequent trade earnings. That authorities have been putting of firm action to ensure energy stability, even as we sink into the worst electricity crisis in the country’s history, has compounded our problems. Failure to arrest this trend immediately will make it well nigh impossible to ensure an ingredient as basic as energy, meaning less production, less consumption and less earning.
The writer is a former finance minister
