Former federal petroleum minister Usman Aminunddin, while speaking at a seminar in Islamabad on Pakistan's Energy Sector, has proposed the carving of a federal energy ministry through the merger of the ministries of petroleum and water and power as well as through the abolition of the Alternative Energy Development Board, which he claims will bring about better co-ordination and efficiency in the energy sector.
He believes that legislation, exploration, development of alternative energy and centralisation of energy resources can impart greater efficiency to this sector, which is the need of the hour. Pakistan's overwhelming dependence on imported energy and the fact that the world's energy reserves are fast depleting should give Pakistan cause for worry, which should prompt the experts to formulate practicable strategies to ensure the country's long-term energy security.
Energy availability at a competitive price and within a convenient delivery timeframe should be the main prongs of the strategy the government needs to devise. According to current projections, the per-barrel price of oil in the international market in the near future will touch $200 mark, which may push Pakistan into a deeper financial crisis because of the reduced competitiveness of our exports.
Pakistan is indeed phenomenally rich in energy resources, including hydel, coal, wind and solar, while the Thar coal reserves alone can yield energy equivalent to around 400 billion barrels of oil. This will be sufficient to meet the country's energy needs for over a century, but the project so far has remained trapped in political or personal hassle.
There are certain reservations about adequacy of Daulatabad field reserves, but if an agreement is signed with Turkmenistan government (which has the world's fourth largest proven gas reserves) such excuses sound only delaying tactics by vested interests who have no sympathy for Pakistan! Aminuddin has also spoken of "energy imperialism" of the west, because many western governments and firms are exploring new avenues to reduce their dependence on the Middle East.
Amidst all these developments that are likely to make a negative impact on energy prices and its availability, Dr Mubarakmand's proposal for the Thar coal gasification project is a good idea, as it can open up new vistas of inexhaustible energy supply. The snag, however, is the paucity of resources to undertake such a huge project. The treatment being meted out to the foreign investors in the KESC is certainly no inducement to foreign investment in Pakistan.
It is said that fragmentation of Pakistan's energy sector is the greatest hindrance that has impeded the sector's development and its viability. Unfortunately no Pakistani government over the decades has made a serious effort to develop the energy sector sufficiently enough to meet the country's present and future needs. Weak institutions, pursuit of inappropriate pricing policies and insufficient public sector investment are believed to be major causes of our energy sector troubles.
Fragmentation of the sector, the high expenses incurred on a top-heavy bureaucracy, rampant power theft and "transmission losses" have badly eroded the sector's financial viability. There is a need to effect a merger of all the energy sector agencies and departments, as Aminuddin has proposed, which will also help reduce its fragmentation. The World Bank has often reminded us of the energy sector's fragmentation as a major flaw, which remains un-rectified.
Investment in new energy technologies can help bring about a viable turnaround. The government needs to accord top priority to fast-track hydropower and coal projects, which can bolster competitiveness of our exports. Secondly, greater investment in the industrial sector and human resources is also urgently needed. Widening of the tax net, and doing away with tax exemptions such agriculture, can yield billions of rupees per annum. Agricultural value addition is another goldmine on which the government should focus.
The current economic slump in Pakistan is due to the energy deficit, which needs to be rectified through the implementation of fast-track hydropower and coal energy projects. It is said that India is currently working on as many as 250 dams and hydropower projects, while Pakistan is fiddling with the elaborately drawn Wapda's "Vision" programme, but seems to be actually focusing on bringing on board more RPPs. The government needs to consider all aspects of the energy ministry proposal, and implement it only if it can bring relief to the economy and the common man.