Rectifying gas inefficiency

The World Bank has asked Pakistan to simplify its gas and distribution network by setting up an independent transmission company in a bid to cut losses of the two gas utilities, SSGCL and SNGPL. These have long faced issues ranging from delays in making their financial results public to high losses. The government has been working on bailing out the gas utilities through different plans, but we know that their only real strategy is to increase tariff rates for honest consumers without doing much to crack down on gas theft. The government has consistently tapped a steady source of revenue, using different heads to increase tariffs for those who pay their dues regularly to compensate for the inefficiency and corruption plaguing state-owned entities. This has been the result of decades of incompetence and dishonesty in the public sector. The World Bank also wants Pakistan to deregulate the pricing mechanism for imported gas, which is likely to result in raised prices and diversion of gas for industrial usage since the usage and ability of industries to pay more is higher. The Bank’s suggestions come as it wants independent decision-making in Pakistan’s blighted energy sector.

An autonomous power sector may well result in a reduction of distribution losses and increase bill recovery, but it may not be able to address the issue of providing domestic consumers with gas in the winters. Every year, domestic consumers are prioritised while the industrial sector is asked to bear load-shedding. Imported gas was meant to bridge this gap and it might help in mitigating the load if the utilities are made efficient. The solution offered to correct these inefficiencies involves taking control away from the government and making the energy sector independent, showing the poor light in which global lenders view our public sector. Given that Pakistan is a country where an entirely new sector was allowed to develop and flourish, namely the CNG sector, when there wasn’t enough fuel to meet demand, the world’s trust in our policymakers’ decision-making abilities is rightly shaky.

Published in The Express Tribune, June 30^th, 2016.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.