Continued energy shortfall

Gas loadshedding has assumed alarming proportions yet again. And the winter season, when gas consumption rises, has yet to arrive. The effect of gas loadshedding on energy generation is palpable with an increase in the number of hours of electricity loadshedding.
The economic fallout of the rising energy shortfall is going to continue to be catastrophic: declining productivity that would lead to lower growth of the Gross Domestic Product and rising unemployment levels. Critics of the government are no longer willing to accept the government rationale that the blame for continued energy shortfall rests with the former government of Musharraf two and a half years after the current dispensation took over the reins of power. The time that the present government has had to resolve the issues of the sector is sufficient for the short-term measures to have come to fruition and for medium-term measures to be nearing completion within the next year or two.
The focus of the federal government on the highly controversial rental power projects (RPPs) remains inexplicable in line with three major findings of the third party audit supported by the former Finance Minister Shaukat Tarin and approved by the cabinet.
First, that the terms of reference were changed midstream - allowing for 14 instead of the earlier 7 percent advance payment to the RPPs - a violation that the Business Recorder had advised merited retendering to ensure that there was a widespread perception of transparency. Second, the audit noted that the country's energy sector was operating well below capacity for two reasons namely the inter-circular debt that led to a severe liquidity crunch within the sector compromising the ability to pay for crude oil imports and the huge transmission losses, one of the highest in the world. Neither of these issues were the government's sustained focus and hence they continue to be significant to this day.
And third, the RPPs would necessarily supply energy at a rate higher than the current rate, which is subject to periodic upward revision in an attempt to ensure full cost recovery in line with the Stand-By Arrangement's (SBA) condition as stipulated by the International Monetary Fund (IMF).
A much cheaper source of energy would have been to invest in hydel generation as well as in coal production and last but not least, in seeking financial assistance from abroad for laying down the pipeline for the Iran-Pakistan (IP) gas pipeline project and/or the Tajikistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project.
Disturbingly Gazprom, which had earlier indicated an interest in bidding for the Iran-Pakistan gas pipeline project, is no longer interested if the Russian Ambassador to Pakistan is to be believed. He added that the construction of the pipeline was a political subject and pointed out that the IP gas pipeline has yet to kick off.
There is little doubt that the government of Pakistan is constrained by international politics in effectively meeting its energy shortfall. Thus, while the US is opposed to the IP gas pipeline because it would generate considerable income for the United Nations-sanctioned Iran, it is evident that Russia's Gazprom is equally reluctant to allow the Central Asian Republics contiguous to Afghanistan to supply its surplus electricity to a South Asian country where US interests are considerable.
So what effectively must be the short-term solution to ending the energy shortfall? The government must focus on the IP gas pipeline, as TAPI involves too many countries' with different foreign policy objectives for it to become operational anytime soon. If this annoys the Americans, then the government must carefully weigh the advantages that accrue from the 1.5 billion dollar annual assistance to Pakistan under the Kerry-Lugar bill which may sustain our status of an energy-deficient country and an energy surplus Pakistan that would no doubt promote industrial output significantly.
It is also important for the federal government to plug leakages from the transmission network. And finally, the focus of any development activity must be on long-term energy sector projects for the next three to four years to ensure that this problem is resolved.