ISLAMABAD: The country’s 25 top experts, in a joint open letter to politicians and decision makers have urged to make the current economic crisis the last one by transforming the country’s energy sector which is only sustainable path to economic sovereignty.
The experts have presented their suggestions to bring improvement in the following areas/ sectors; (i) overhauling governance and building institutional capacity; (ii) energy conservation; (iii) harnessing indigenous resources; (iv) electrification of energy use; (v) energy efficiency and removal of price anomalies; and (vi) deregulation and privatisation.
According to the open letter, Pakistan is presently in the midst of one of the worst economic crises in its history. High inflation, large twin deficits, dwindling forex reserves, fast weakening currency and elevated Eurobond yields are all symptoms of an economy in severe distress.
The country’s external and fiscal finances are crumbling under the overwhelming weight of energy costs. The share of imports, which was 43% of total primary energy supply in FY 2020, has been continuously increasing.
At more than $ 26 billion, energy imports (oil, LNG and coal) were the single biggest contributor to Pakistan’s current account deficit of $ 17.4 billion in FY 2022. It is tragic that a country endowed with large fossil fuel reserves and huge renewable resources meets more than 2/5th of its energy needs through imports.
The experts are of the view that decades of misguided policies have fostered energy inefficiency and favoured imports over development of indigenous energy resources. Misgovernance and policy failures have created a monster in the form of circular debt which has devoured trillions in budgetary resources and yet there in an outstanding circular debt stock of over Rs 3.2 trillion in power and gas sectors combined.
They said that national dignity and security are compromised with each economic bailout that Pakistan seeks from close friends, international donors, and multilateral lenders, adding that as the nation celebrated the diamond jubilee of its independence, it must take a moment to introspect as to why our country has failed to achieve economic sovereignty in the last 75 years?
The experts maintained that the energy sector has the potential to swing from being the biggest burden on the country’s economy to propelling it towards economic security and prosperity. This course reversal, however, will require unflinching commitment by political leaders and decision-makers to energy sector reforms in the face of inevitable resistance from the current beneficiaries and deeply-entrenched vested interests. There is a dire need for non-partisan commitment and support for energy sector reforms.
The experts have submitted the following recommendations to the political leaders and decision makers.
The experts have suggested that Nepra and Ogra must be turned into first class regulatory bodies staffed with professionals. Public Sector Entities (PSEs) that are not to be privatised should be made autonomous, not just on paper but in reality.
Energy sector needs to innovate competitively
They said that Pakistan should conserve energy as 5% energy savings would reduce the energy import bill by 12% or over $ 3.0 billion.
They have suggested the following measures for meaningful reduction in energy consumption (i) introduction of daylight saving timing by moving clocks forward by at least one hour; (ii) closure of shopping centres by 7 pm and restaurants/wedding halls by 10 pm; (iii) closure of bank branches by 2 pm; (iv) closure of all public/private offices at 5 pm; (v) reduction of school working days to four per week with longer hours per working day; (vi) keeping minimum temperature setting for air-conditioning at 26 degrees in all public and private offices; and (vii) switching off alternate street lights.
The experts have urged on use of indigenous resources to generate energy saying that solar and wind projects can be developed within 6 to 12 months and also in a modular manner to fit more precisely with the demand projections.
Conversion of existing wind farms to wind/solar hybrid models should be allowed where it is economically feasible. Expansion of rooftop solar installations can be further accelerated through financing schemes and ensuring faster net-metering approvals. Setting up a state-of-the-art refinery with integrated petrochemical complex is another key requirement given the present redundant inefficient refinery infrastructure and the need for substitution of imported petroleum products.
The experts further proposed that entire public sector transport system be converted to electric system and hybrid wind/solar farms could be setup to power the electric buses by wheeling electricity through KE’s network. To reduce energy inefficiency in captive power generation, minimum thermal efficiency standards for different fuels should be defined and enforced.
Deregulation of price controls and privatisation of energy sector, PSEs is the most logical path to achieving energy sector sustainability in Pakistan. Unwarranted fears about cost of stranded assets to the government are used to stymie progress towards competitive energy markets. The Competitive Trading Bilateral Contract Market (CTBCM) model must be implemented in letter and spirit. The gas markets should also be opened up on a similar model.
The experts who signed the joint letter are; Aamir Khattak, security analyst, Abdul Rehman Warraich, CFA ex-director general, Debt Office, MoF, Dr Adeel Waqas Professor of Economics, NUST, Dr Ashfaque Hassan Khan, Principal, School of Social Sciences & Humanities, NUST, Asif Ali Qureshi, CFA ex-member, Economic Advisory Council, Asim Riaz, Energy Specialist, Dr Athar Masood Ahmed, Professor of Economics, NUST, Muhammad Ali, ex-chairman, SECP, Muhammad Jawaid Iqbal, CFA ex-president, CFA Society of Pakistan, Javed Jadoon, ex-general manager, Mari Petroleum, Mansoor Ghayur, ex-head of Regulatory Affairs and Business Development, United Energy Pakistan, Mehran Mirza, ex-chief executive, Premier Oil, Dr Athar Masood Ahmed, Professor of Economics, NUST, Faisal Bengali Director, Sui Southern Gas Company, Dr Faisal Jamil, Associate Professor of Economics, NUST, Dr Fiaz Ahmad Chaudhry, Director, LUMS Energy Institute, ex-managing director, NTDC, Mohammad Razi Raziuddin, Energy Consultant, Mohammad Shahid C-Level, Electric Utility Professional, Muqtadar Quraishi, ex-faculty member, Cornell University, Adjunct Faculty, IBA, Naeem Yahya Mir, ex-managing director, PSO, Natasha Jehangir Khan, Lawyer and Consultant, Power sector reforms, Saeed Qureshi, E&P Specialist, ex-director, OGDC, Shahid Hameed, ex-chief executive, Spud Energy, Shamsuddin Shaikh, ex-chief executive, Sindh Engro Coal Mining, Syed Faizan Ali Shah, Renewable Energy & Grid Integration Expert and Dr Zafar Mahmood, Principal, USPCASE, NUST.
Copyright Business Recorder, 2022