Energy conference predicts dark days ahead

Expert­s propos­e hike in fuel prices, abando­ning irrati­onal tariff­s.

Shahbaz Rana April 13, 2011

ISLAMABAD:


Abandoning government-controlled power tariff and raising the price of conventional fuels such as gas were among the proposals floated at the conclusion of the three-day Pakistan Energy Conference (PEC), convened to find short- and long-term solutions to the crippling energy crisis.


Stakeholders at the conference proposed that the government implement a ten-point “blueprint” dealing with core areas of the energy sector, and wrap up “scramble[d] policies”.

The PEC proposed to slap an enhanced “gas surcharge” to bring natural gas prices at par with those of alternative fuels, with an aim to conserve gas and attract new investments in the sector. Based on July rates, it proposed increasing gas prices by up to 800 per cent for the residential sector.

Conference participants also recommended abolishing the slab-based energy pricing mechanism.

“Government-controlled power tariff does not reflect the true cost of power generation … single, national power tariff [should] be disbanded and power tariff for each distribution company [should] be de-regulated,” recommended the PEC, to bring an end to chronic circular debt.

The Water and Power Minister Syed Naveed Qamar endorsed the PEC recommendations for tariff rationalisation and said that pumping in more money cannot work until the government resolved the core problem of irrational tariffs. The government does not have a magic wand to end load shedding, he added.

This year marks the first time that the government has resorted to the gas load shedding in summer, prompting CNG station owners to close down their stations in protest. Meanwhile, average power shortfall is around 3,300 MW, leading to electricity load-shedding for 10 to 14 hours in towns and villages across the country, even in moderate weather.

The federal government wanted to implement the two-holidays-per-week policy again, in order to conserve energy, but the final decision will be taken in consultation with the provinces, said Qamar while speaking to the media after the conference.

The government conserved 300 MW per day on account of energy conservation measures implemented last year, he added. Sources add that the two-holidays-per-week proposal by the federal government was opposed by the Punjab government.

The PEC also recommended fast-track import of liquefied natural gas (LNG) to meet the shortfall in short-term energy requirements. Pakistan’s current credit rating of below investment grade is not conducive for negotiating long-term LNG contracts, in which the LNG suppliers require payment securities.

Conference participants also proposed privatisation of all state-owned thermal power plants to enhance their efficiency, and recommended increasing tariffs for hydel- and nuclear-based power generation to raise funds for building new hydel and nuclear power plants.

Describing the Thar coal reserves as game changer for Pakistan, the conference suggested formulating a Thar coal development master plan, setting out a long-term roadmap for the use of coal.

Like the Friends of Democratic Pakistan forum, the conference proposed merging the ministries of water and power, and petroleum and natural resources, to form an energy ministry that would facilitate long-term energy investments.

Meanwhile, Petroleum Institute of Pakistan Chairman Zaiviji Ismail said that the energy sector problems are so serious that they need to be tackled from multiple fronts.

“Doing nothing and waiting for things to happen should certainly not be the option. If actions are not taken the crisis will worsen”, he said, adding that formulating a workable, integrated energy plan for the country was imperative.





Published in The Express Tribune, April 13th, 2011.

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COMMENTS (21)

Ali | 9 years ago | Reply | Recommend Privatising Energy power stations can either prove to be a boon or a curse. The KESC was privatised, and despite good intentions on part of the new owner; they wanted to reduce what they considered to be excess staff, the PPP & MQM clubbed together and trashed the companies HQ. Would you invest in Pakistani power if your customers were like this? The other risk is that our "elites" will buy up the stations, and create havoc in the market - a bit like the sugar barons, by creating artifical shortages and hiking prices.
Ali | 9 years ago | Reply | Recommend We don't have the technological prowess to exploit nuclear enery to the same extent as France, US. Electricity provided by dams aren't reliable. (What happens during periods of extended drought) Renewables aren't practical yet - the price per MW is too expensive. Oil is too expensive. LNG requires huge investments of the order of billions of dollars per terminal. However once contructed, it is a very good power source.But there is no way we are organised enough to do anything of this magnitude. Natural gas - Iran has alot to sell but do we have the will and money to buy? Our "allies" will stamp that idea out. We are depleting our own reserves and not finding enough new sources. Yes things do look bleak.
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