This crisis is a moment: Part - IV

The federation needs to ensure policy continuity, transparent bidding, honouring of agreements and contracts, obligations being timely honoured and regulator interfering only when self-monitoring fails.

For now, shifting peak demand can reduce the bill by 15-17 per cent by closing commercial markets earlier and active conservation undertaken by users.

Our merit order should be based on energy plus capacity charge to ensure that the impact of capacity payments of high capex projects is fully understood. We also need to plan and tackle the impact on the ensuing grid/tariff structure due to the addition of 25000MW per the Indicative Generation Capacity Expansion Plan (IGCEP), primarily based on renewable energy and a 5.0 per cent peak demand growth.

Encouraging staggering FDI to build energy infrastructure requires deregulated markets with independent regulator(s) having teeth despite the expectation of imported fuel reducing from 28 per cent to 20 per cent in 2031, per the IGCEP.

Pakistan will always be in a catching-up mode to meet its energy demand. The National Energy Efficiency and Conservation Authority (NEECA) has been in a learning mode as surprisingly, energy conservation was started as a USAID project in 1985 and not much has been achieved by the National & Provincial Energy and Conservation Authority (Enercon in 2016) or under the Energy Conservation Policy 2006 or the 2023 National Energy and Conservation Policy.

Intent and actions can be learnt from the EU which took on the challenge recently through the European Natural Gas Demand Reduction Plan and achieved in three years about 15 per cent reduced consumption by households and industry. NEECA needs to similarly deliver.

The impact of circular debt of the energy sector requires pricing measures and not again revising PPAs; timely collections but spot buying of LNG does not help the cause. The E&P sector gear-up is slow due to cash constraints. The cross subsidy for 60 per cent of the population using 200 units is distorting the tariff for others. Similarly, 57 per cent of domestic gas consumers are in the protected category and with depleting gas reserves by 5-7 per cent, the CAGR including LNG imports requires burdening other categories.

Revision in gas tariff has to be notified per law and going forward gas has to be charged at LNG notified price and electricity at the cost of furnace oil which will provide the cushion for the funding of BISP. The ongoing campaign against power theft targets low-income and small-scale offenders with limited action against protected defaulters and insiders. Similar efforts have also been undertaken by SNGPL and SSGC.

Our energy mix has changed significantly over the last 15 years for the better. Businesses have to take the lead for deliverance of reasonable cost of energy under planned strategy and implementation of actions expediting deregulation and assisting in overcoming our increasing energy imports.

But this can only come at the back of confidence-building measures, an acceptance that making profits is kosher and that investments are not from laundered funds. There should be focus on industrial competitiveness based on a 20-year infrastructure roadmap for exports and energy imports by the Ministry of Maritime Affairs with the Ministry of Railways and Communications undertaking implementation including plans on eliminating its annual Rs 45 billion subsidy by increasing freight volumes, enhancing productivity and facilitating post-harvest infrastructure.

The Ministry of Energy is to lead our energy roadmap for transmission, distribution and generation. With the Ministry of Industries ensuring Product, Cottage Industry and SMEs Development focus should be on value addition and increasing export of goods and services from 9.0 per cent (2021) vs the world average of 42 per cent.

Services include IT, hospitality and export of surplus skilled unskilled labour and farmers, nurses, doctors, and technicians, engineers and computer science graduates to the Gulf and the West. But this necessitates the Ministry of Federal Education and Professional Training (MoFEPT) to define implementation of an education roadmap to utilize 4.5 per cent of GDP vs 2.38 per cent today. And for the Ministry of Science and Technology (MoS&T), Higher Education Commission (HEC) and National Vocational and Technical Training Commission (NAVTTC) to implement a technical resource development roadmap to utilize 1.5 per cent of GDP over a 20-year horizon including ensuring inclusivity, values and induction of principles of professionalism, ethics, tolerance and respect to diversity to the 241.5 million-strong nation is now a paramount need.

Despite low Higher Education Institution (HEI) graduates’ employability, enrollment is increasing. Lack of market orientation of HEIs is hurting entrepreneurship and not providing skills of problem solving, creativity, critical thinking and effective writing and speaking ability along with individual grooming.

Thus, the HEC needs to allow revamping and upgrading of curricula to meet job market requirements and that should be left to institutions with guidelines only provided by the HEC and transparent yearly performance undertaken by it. Resource development happens extensively in the government but apparently not to enlighten or encourage independent thinking or foster a culture of innovation and adaptability or risk taking. We are not encouraging improvement in skills that develop our human resource in bureaucracy.

Talk of new refinery over the past six years, transformation of the energy sector, delay in privatization over the past many years, lack of ownership and delay in implementation, dependencies on external consultants/advisors, extended deliberation on policy lacking target, delayed decision, understanding of new dimensions, fear, and lack of capacity of team and focus are glaring examples of pitfalls in the past.

But will the future reflect our inability to transform, execute structural changes or will Rising Pakistan benefit from World Bank advocacy that ‘crisis’ can be a moment as it has been for others who built long-term consensus around key features? In conclusion, a merit-based governance and justice system, regional economic cooperation, and integrated cross-functional planning with a competitive business environment and a hands-off government role in businesses are essential for Pakistan over the next 20 years.

Concluded

The writer is an experienced professional who has served as managing director of Pakistan State Oil (PSO) and chairman of the Petroleum Institute of Pakistan and OCAC. He can be reached at: ihaque58@gmail.com