Critical situation: call for implementing integrated energy policy
The government has been asked to implement integrated energy policy to tackle the critical situation in energy sector which has become a primary constraint to the country's economic development. This was stated by the Former World Bank's Director, Operations, Zaid Alahdad here on Tuesday at the launching of book/monograph titled 'Pakistan Energy Sector from crisis to crisis breaking the chain' organised by the Pakistan Institute of Development Economics (PIDE).
Copyright Business Recorder, 2012
Zaid identified absence of co-ordinated policy formulation as a fundamental issue and underlined the need for Integrated Energy Planning and Policy Formulation (IEP) backed by the institutional framework. He maintained that without adopting integrated energy planning and policy, the decision-making in the energy sector would remain inherently flawed.
Zaid stated that the IEP mechanism "is not new to Pakistan where it was introduced in the early 1980s". However, over time, with declining institutions and erosion of human capacity, fledgling efforts were abandoned. This was partly because IEP lost favour of international institutions on the presumption that market forces would lead to right policy choices. He regretted that the problem was being addressed largely through an ad hoc process, which "responds to crisis situation, instead of preventing crisis through a long-term vision".
He said that the key element in IEP, which required restructuring of policy institutions to reverse the unchecked fragmentation that occurred over the years, "is perhaps the most difficult and needed strong political will". He said that there was need to consolidate policy institutions "into a single ministry of energy". Policy makers, he said, had started thinking along these lines, but inherent in their deliberations "is the potential spin-off of hydropower into another ministry, a move which would undermine the whole effort".
The IEP, he stated, could address serious issues confronting the sector, including the growing deficit, low utilisation of existing resources, developing an optimum energy mix, circular debt, subsidies, and "most importantly alleviating the burden of the poor through pro-poor energy policies". He emphasised that the state of the energy sector (and by extension) the economy "is not at all beyond redemption".
"Despite a significant body of literature on issues and options in the sector, the deterioration continues, contributing to an ever-widening energy deficit." Planning Commission's Member, Energy, Shahid Sattar agreed that there was a need for implementing an integrated energy policy. He said that exorbitant subsidies, with nothing to show in terms of results, lack of policy papers and the importance of an appropriate pricing policy were key issues of energy sector.
PIDE Vice-Chancellor Dr Rashid Amjad said that the integration of energy plans with economic objective remain weak. Export growth, he said, had not managed to offset the raising oil export bill. He said that too many actors at the policy level, lack of political will and issues of pricing and subsidies remained paramount. He also called for the rapid implementation of integrated energy planning.