ISLAMABAD: The Overseas Investors Chamber of Commerce and Industry (OICCI), the collective voice of top foreign investors in Pakistan, has proposed liberalisation and transformation of the monopolistic power market into a multi buyer-seller marketplace considering that the exclusivity to sell/distribute power for DISCO's is scheduled to terminate in 2022.
This will create options for power purchasers as well as producers to enter bilateral deals, ie, energy sale via B2B mode through a fair and transparent wheeling regime.
The OICCI, while unveiling the salient features of its 'OICCI Energy Recommendations 2021' here in Islamabad said that the recommendations focus on implementing an efficient and cost-effective energy supply chain, while increasing the share of green energy sources to meet the environment and sustainability milestones. These recommendations have also been shared with the government and other stakeholders.
Highlighting the key elements, OICCI Vice-President, Ghiyas Khan, emphasized that OICCI's proposed recommendations are the collective view of leading energy sector professionals associated with OICCI members.
In reply to question, he said that the main reason for the trade deficit and exports competitiveness is higher prices of energy which is being produced on imported fuels, adding that there is lack of proper planning in the energy sector.
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He further contended that imported fuel is one of the big challenges for the exporters. The share of OICCI's member companies is very meager.
"We are confident that the proposed recommendations will be instrumental in GoP's continued endeavor towards reforming the overall energy sector and bringing it at par with international standards. These steps shall also be indispensable in meeting the growing energy demand in the country at an optimal cost, making us internationally competitive for export and primed for the economic growth of the country," he added.
The OICCI Energy Report includes separate proposals for the Power, Upstream, Downstream, LNG, and Renewable work streams. On the downstream policy framework and structure, it recommends to exhaustively revise all aspects of governance including, but not limited to, review of the price structure by moving towards price deregulation, supply chain management focusing on the issues with logistics infrastructure including the existing port constraint due to insufficient unloading capacity, long waiting time, vessel planning, import dependency, and need for building strategic stocks by increasing storage capacity.
On a priority basis, there should be a mutually agreed mechanism for periodic revisions in the downstream price structure, more specifically margins, to ensure that it remains reflective of actual costs to the oil marketing companies, followed by the complete deregulation of MS and HSD that constitute about 80% of total petroleum products consumption.
The CE/Secretary General, OICCI, Abdul Aleem added that "Pakistan should leverage the global resolve to combat climate change and take benefit of the pool of funds available for investment in renewable energy (RE), such as Green Climate Fund (GCF), to underwrite debt issued by local/foreign banks, that will eventually encourage more investments and grow the RE footprint resulting in lower cost of power. Furthermore, increasing power generation from Renewable Energy is also critical for achieving net zero carbon emission by 2050 as per the Paris Climate Agreement."
He did not give a clear response about Pakistan's country risk in 2021 as compared to 2020, saying that the companies might discuss it, but they have not shared with the OICCI. However, he was of the view that investors made their investment plans based on their own assessments.
The OICCI Energy recommendations also urged the development of LNG sector, by fast tracking all projects that will create additional pipeline capacity for new LNG terminal developers and/or existing terminals looking to expand.
OICCI has appreciated the authorities in issuing licences and approvals for two new terminal developers in September last year, but have asked the authorities to facilitate the existing customers at LNG terminals to sign off on the Terminal Coordination Agreement (TCA) to address the shortages likely to occur till such time as these terminals come online.
Copyright Business Recorder, 2021
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