Political economy of energy: FPCCI urges PM to convene meeting of stakeholders, experts

ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged Prime Minister Imran Khan to convene a meeting of stakeholders and experts to find out solution of the political economy of energy. In a letter to the prime minister, FPCCI President Mian Nasir Hayat Magoon said that there appears to be mismanagement in administrating the strategic plans in respect of gas economy with contingencies to minimise the adverse economic impacts on the productive and production economy of the country.

Pakistan is one of the world's biggest energy consumer, being sixth populous nation and soon to rank as the fifth populous nation. There is an urgent need to get the policy move in the right direction for self-sufficiency.

The present demand for imported coal, oil and RLNG is outpacing domestic production. Thus, the country is being forced to import energy resources by spending foreign capital. He said that the FPCCI believes that the policy direction to include investment in domestic oil and natural gas exploration is the only sustainable solution that will help quench Pakistan's increasing energy demand.

"We need to discuss the road for self-sufficiency in oil and gas preferably on medium-term basis and achieve self-sufficiency or increase the share of domestic gas and oil," he added.

The FPCCI is of the view that hydrocarbon exploration and licensing policy should be discussed for developing framework to guide the polices for developing hydrocarbon sector for the next 20-25 years. The oil and gas will continue to play a dominant role in meeting the energy demand of the country.

Following suggestion have been proposed for structuring an investor-friendly policy: (i) self-reliance through increasing domestic production and investment in oil exploration; (ii) quality of life be improved through providing cleaner and greener energy resources; (iii) technology upgradation and capacity building in all facets of the oil and gas industry to be under taken for matching global quality competitiveness; (iv) energy security for the country keeping in view strategic and defence consideration; (v) the policy on a long term should be considered as main thrust of activities; (vi) focus on oil security through increasing exploration efforts to achieve 100 percent coverage of unexplored basins in a time-bound manner to keep enhancing domestic increased availability of oil and gas; (vii) maintain adequate levels of self-sufficiency in refining; (viii) establish adequate strategic storages of crude and petroleum products in different locations; (ix) create additional infrastructure for distribution and marketing of oil and gas for adjustment of shortages by the system management; (x) open up the hydrocarbon market for free and fair competition; and (xi) design a rational tariff and pricing policy, so that consumers to get the petroleum products at comparative and reasonable prices.

The association says that domestic oil and gas sector has a huge potential. The balance recoverable reserves of the country as on June 30, 2016 were estimated to be 350 million barrels of oil. The total oil recourse is 27 billion barrels, while the domestic production 86,000 barrels per day.

Further, Pakistan being one of the largest consumer of the gas has a total resource potential of 282 trillion cubic feet with recoverable reserves estimated at 24 trillion cubic feet and production of almost four billion cubic feet per day.

"It is imperative to call the meeting of business community representatives, experts from academia and if the need be technical assistance of expert and true Pakistanis from within and overseas be called to assist in formulating a policy which detaches itself from import basis psyche and favours and moves toward making use of available domestic potential with infrastructure supporting the base load and providing the crises load due to some abnormal situation which should not be beyond force majeure," he continued.

Copyright Business Recorder, 2021