Pakistan

Gilani orders revamp of energy sector

No new gas connections for six months, heads and boards of directors of all state-owned oil and gas companies removed.

Sumera Khan April 18, 2011

ISLAMABAD:

Hours after President Asif Ali Zardari reappointed him adviser to the prime minister on petroleum, newly-elected Senator Asim Hussain was ordered by Prime Minister Yousaf Raza Gilani to embark on an ambitious plan to revamp the country’s energy sector.

In a meeting between Senator Hussain and the prime minister at the premier’s official residence in Islamabad on Sunday evening, Gilani laid out a plan that was focused on managing the severe energy crisis in the country.

Among the problems facing the energy sector are an extreme shortage of natural gas and a massive inter-corporate circular debt problem that has debilitated the production capacity of power generation companies and refineries.

The most immediate consequence for ordinary consumers will be the six-month ban on new gas connections, which the prime minister said would not be granted “under any circumstance.”

But most of the plan seemed focused on reforming the way oil and gas companies operate in Pakistan, with a view to increasing domestic production capacity.

All of the managing directors of the state-owned oil and gas companies have been removed from their jobs with immediate effect. These include the heads of some of the largest companies in Pakistan, including the Oil & Gas Development Corporation, Pakistan Petroleum, Sui Northern Gas Pipelines, and Sui Southern Gas Company, among others.

The boards of directors of each of these companies will also be removed and reconstituted. In a bid to insulate the companies from political interference, the petroleum minister and petroleum secretary will not be represented on the board, despite the government being the single largest shareholder.

The government has often been criticised for forcing state-owned energy companies to pay dividends to fill its budget gaps rather than allowing them to reinvest their profits into expanding domestic energy production. The prime minister’s moves appear to be geared towards addressing that criticism.

In addition, the prime minister also ordered the ministry to remove any regulatory impediments to the domestic exploration and distribution of oil and gas.

In a bid to improve the efficiency of the ministry itself, all petroleum ministry employees over the age of 60 or who are on contract were immediately removed from their positions.

Sui Northern Gas Pipelines and Sui Southern Gas Company, the country’s only two retail gas distribution companies, have been ordered to create a joint venture company that will import, market and distribute liquefied petroleum gas (LPG) into the country.

The petroleum ministry was also ordered to come up with a two-year plan to begin increasing domestic production of oil and gas.

The prime minister also ordered the ministry to vigorously pursue court cases against people accused of not paying their utility bills, one of the single biggest financial obstacles faced by energy companies in Pakistan.

All of these moves come as part of the prime minister’s “hydrocarbon vision” for the next 20 years, which includes a plan to substantially increase the amount of energy the country derives from coal. The Thar Desert in Sindh has one of the largest reserves of coal in the world.

Senator Asim Hussain will resume his duties as the prime minister’s adviser on petroleum, a cabinet level position, on Monday (today). He had been removed from the position earlier on allegations of corruption.

The senator was also asked by the prime minister to “rationalise” the prices of petroleum products in the near term, a euphemism for trying to find the balance between prices that are economically necessary (higher) and those that are politically feasible (lower).

The senator is a close personal friend of the president. Both of them attended Cadet College Petaro. Additional
reporting by Zia Khan

Published in The Express Tribune, April 18^th, 2011.

COMMENTS (15)

usman | 12 years ago | Reply what should i say its a shame living here while these people are ruling us no thinking no policy work nothing ban on gas connections now wat about those people who are in between the gas connections of resturants industry cng and have paid heavy demand notes gas line costs 50lakh per km for industry now what those people will do sngpl has stoped all kind of works for six months even if u have applied six months ago in a country where there r no policies whould u like to invest anything.

H Mian | 13 years ago | Reply For all the hype of merit, look at the merit and reference of the very person saying all this: an "orthopaedic surgeon doctor" was selected on "merit" as Adviser for Petroleum!!!! Wow, and of course there is not reference (except that of Mr. Zardari!!!) For how long will you people keep becoming fools at the hands of these people?

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Cautious | 13 years ago | Reply Getting rid of the old maybe a good start -- but selecting competent honest replacements maybe the biggest challenge.

Xohaib Ali | 13 years ago | Reply Neither they follow any criteria for hiring, nor they follow any criteria for firing. I thought this style of governance had died down with Nizam Saqqa. But apparently our power corridors are full of them.

Sverige | 13 years ago | Reply I think its a good step taken towards the progress. Petrolium companies should be operated autonomously, finding their own ways to increase the utilization. This will certainly help not to be dictated by the govt. tycoons and the control will be in hands of employees. Instead of paying heavy dividents to the share holders OGDC could just invest more on formalizing other sources of energy. Just like "Vattenfall" in Sweden. This way the corporate environment will be promoted and new foreign investors can be attracted in the sector which were long gone. In the future, not the govt should be accountable for any shortage but the high managemet of the company.

Junaid Mazhar | 13 years ago | Reply The premier was once again not able to deal with the root causes of the issue. With no clear vision they are just moving about in wilderness. Instead of increasing the production they are investing on conservation of energy and checking for the black sheep in ministries and companies.Trust me nothing good is going to happen by this so called 'courageous' step of govt.

Abbottonian | 13 years ago | Reply The bottom line is " The senator (Who is PMs new advisor on Petroleum and was earlier removed on corruption charges) is a close personal friend of the president. Both of them attended Cadet College Petaro." Not difficult to sense the setup............

Billoo Bhaya | 13 years ago | Reply Some have WAGs on their priority list like CM Punjab, others have school chums. None have professionals in their fields on a priority list. Its an open road to Perdition.

H Mian | 13 years ago | Reply Just how serious the government is is evident from the fact that they have appointed an orthopaedic surgeon as adviser for petroleum. hahahah You can be sure that public will get nothing, the oil and gas situation will get worse, and relevant authorities and newly appointed ones will get richer and richer.

Nahyan Mirza | 13 years ago | Reply While the story is comprehensive and gives the reader the impression that the government is taking drastic and major steps to arrest the power and energy crisis, I feel that the last sentence "The senator is a close personal friend of the president. Both of them attended Cadet College Petaro" is highly irrelevant and seems to be a case of unjustified mud slinging and conspiracy mongering. The story is completely based on what the PM has ordered to meet the rising petroleum and energy prises is shortages. In this context this list bit is completely out of place, If ET wants to do a corruption and conspiracy story on this appointment of the Advisor it should do so separately and not taint this story with unnecessary speculation. PS I am neither a sympathizer of the Zardari government nor related to the Petroleum Ministry or the senator in question in any way. I am just a general reader and an ex-journalist and currently a Communications Consultant.

Rakesh | 13 years ago | Reply Their vision for energy security involves "includes a plan to substantially increase the amount of energy the country derives from coal." This is unsustainable. The strategy should be multi-pronged and has to focus on multiple sources, more aggressively, including atomic, solar and wind. In next twenty years, the whole world would move away from coal, while we embrace it. We would build power-plants that run on it and by the time we are done building them, they'd be obsolete. Our country needs a better vision than short-term cronyism and long-term corruption.It needs be based on sound policy. Coal is not the only potential source of energy available to us!

MAD | 13 years ago | Reply So far I like the sound of it. unfortunately I have a fairly good idea of how it will all end up and I dont think anyone will like that too much.

SK | 13 years ago | Reply what a joke!!!!!! Dr. Asim was the one who just last year faced corruption charges ofr Rs. 14 billion and was removed and now he is back with FULL vengeance- his only and most important asset these days is his friendship with egomaniac Zardari who will ruin the country but will not tolerate removal of any one of his hooligans And then you expect petroleum policy by a man whose only knowledge about petrol is how to buy it for car from a pump....

Khurrum | 13 years ago | Reply As always expected from this government ... adressing the problem not the root cause ... idiotic steps taken by a goof priminister!

KR | 13 years ago | Reply Welcome to Islamic Republic of Corruption, why in the world everyone acting like that they are in absolute shock to find out that we are headed for major trouble in Pakistan such as shortage of all types of fuel and even water. Main reason we have dark days ahead of us simply because no government (past and specially present) has ever kept up the development of infrastructure directional proportional to the population growth. And if we think it’s bad now just wait, show is just about to start, not only we will not have electricity, natural gas or kerosene but WE ARE RUNNING OUT OF FOOD ALSO. With rising food prices and increasing inflation poor man/woman can’t even afford to feed their families anymore and this will only increase crime and civil disobedience. Our corrupt politicians are not the solution but actually the problem, all these clowns need to work together to save our country instead of trying to work in smaller groups and just worrying about their jobs and scheming about some stupid coalition in order to stay in power. These are our problems so let’s be realistic and this time don’t try to blame this on India or America, this mess was created by our own corrupt Islamic brother and it is time for us to act like grownups and accept our responsibilities. Next time instead of voting for a political party we need to vote for the best candidate and ask him/her, how are they qualified for the job , what is their goal and how are they going to bring any change ??????????

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