Energy revitalised? By Ummekulsum Imam - Tuesday 26th April 2011

FOR the past three years, little has been derided more than this government’s energy policy. Leadership has proved elusive. The toll exacted on this cornerstone of the economy has deepened popular discontent. But there may now be reason to expect otherwise.
Last week’s announcement by the newly appointed adviser for Petroleum and Natural Resources, Dr Asim Hussain, offered glimpses of a sorely awaited overhaul. Several heads of failing state-run oil and gas companies have been replaced, with more changes on the anvil. A decision has been made to import LNG through the swiftest option available, which would halve the current shortfall.
At the same time, cheaper, durable alternatives will be pursued through regional pipelines. The LPG import market will see more competition, with the entry of two state-owned companies. While these proposals signal steps in the right direction, a
determined course of action must ensue.
Since the 1980s, Pakistan has hurtled into the embrace of thermal power generation, accelerating as the years have slipped by. The trend was dictated not by a considered search for sustainable sources of affordable energy, but by capitulating to a
craving for a quick fix. Daunted by the task of developing the infrastructure needed to best exploit the country’s own abundance of ultimately cheaper energy sources, we settled for a pricey addiction to oil-fired power generation, ably assisted by the donor community, most notably the World Bank.
With oil prices hitting a two-and-a-half-year high this month, the indulgence has been thrown into sharp relief. Scarcely has the case for hydel-based power generation and the tapping of local coal reserves looked more persuasive. The failure to approach either alternative earlier reflects a systemic weakness. Lured by the appeal of short-term solutions, political leaders prefer not to summon the resolve needed to settle disputes over dams, accommodate populations that may be displaced and commit the sums involved. The bloated and sclerotic bureaucracy fares no better.
The need to prioritise indigenous, cost-effective resources should be clear. While oil-fired power generation may have its uses in the short term, it cannot be relied upon to plug Pakistan’s widening energy gap. Dams and Thar coal have long served as the obvious, but neglected alternatives to the self-defeating course of the last two decades. Finally, during the past three years, encouraging attempts have been made to unearth coal in Thar. Some overdue attention has also been cast on building water reservoirs. Hydel-generated power yields other benefits, being a renewable source of energy which produces neither waste nor greenhouse gas emissions.
Such benefits should have also appealed to an international donor community that prides itself on environmental awareness.
Instead, it heralded the government’s faltering fixation on the dirtier and dearer energy source of imported oil during the last two decades. Of course, it is the government’s responsibility to persuade donors of the worth of its policies and enlist international support for areas of the economy considered vital to prosperity. Instead, the government is beset by a dizzying array of inefficient agencies often working at cross purposes.
An invigorated implementation plan to expedite all feasible hydel projects and to make this a priority area for donor monies is imperative. All efforts to enable the exploitation of Thar coal on a fast-track basis must be pursued.
Second, a more determined shift towards dams and coal needs to be accompanied by both immediate and longer-term arrangements for the supply of gas. The current LNG deficit stands at almost a billion cubic feet per day, and gloomier observers fear that it could more than triple by 2014. The decision to begin short-term imports of LNG while the various arms of government agree on a suitable long-term contract is the only way to stave off a permanent shutdown of myriad economic activities. Time has already been lost mulling over whether to pursue the more protracted option of importing through an offshore terminal.
In the longer term, Pakistan’s growing gas needs can only be addressed by the completion of the Iran-Pakistan pipeline. For a government denounced as being weak-kneed at home and abroad, it evinced impressive resolve by signing the agreement.
Defying stout opposition from Washington and Riyadh, the pipeline privileges Pakistan’s own interests. Not only does it have the potential to dramatically dent the country’s energy deficit, it could also help relieve its sense of regional isolation. The newly reappointed adviser played a decisive role in the signing of the IP pipeline during his last stint. He must now ensure its execution.
Not unlike some other sectors of the economy, LPG supplies are presently plagued by price-fixing enthusiasts. Given that some of the most economically vulnerable sections of society comprise LPG consumers, opening this market comprising both domestic production and imports to greater competition could yield lower prices, benefiting poor consumers.
Finally, integration of the water & power and petroleum ministries into an energy ministry should be considered, while at the same time halting recruitment, if not retrenching. Extensions or promotions of personnel should be linked to performance rather than obsequiousness or patronage. There is a direct link between a human resource oversupply and a capacity deficit.
Unless Pakistan has a government determined enough to tackle this core issue driving poor governance, little can be achieved in the long term, and we, as a nation will continue tinkering at the margins.
The writer is an entrepreneur involved in the energy sector.

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